Aeropostale Is Struggling To Survive, Stock Down 96% In Two Years
Sales have fallen by double-digit percentages for nine consecutive quarters, and investors are rushing to dump the company’s stock.
AEROPOSTALE / Via aeropostale.com
Aeropostale is swiftly fading from the malls and the minds of America's teens, and the company's stock and future prospects are fading just as fast.
The teen retailer's sales fell 20% in the three months ended Oct. 31, a ninth straight quarter of double-digit sales declines. It hasn't posted a quarterly profit in three years, and its stock has fallen 96% since the end of 2013, trading at just 40 cents a share today. And in the past three months, the company has twice been warned that its stock is at risk of being delisted from the New York Stock Exchange.
At today's market price, the company — projected to pull in about $1.6 billion in revenue this year — is valued at just $35 million.
Aeropostale stock, from 2014 to today:
Google Finance
It's not the scenario CEO Julian Geiger promised in March, when he said this year's back-to-school season "will be a seminal period in which we will all see just how far we have come in the resurrection of one of America's great young brands."
Geiger, who returned to Aeropostale last year to turn the retailer around, said on a Wednesday earnings call that while he was disappointed with the results, the company "learned a lot" and will present "a comprehensive strategy for 2016" in March.
But for all his dogged optimism, the reality is that an Aeropostale resurgence is looking increasingly unlikely. While the company nosedives, Abercrombie and Hollister are showing signs they're regaining popularity with young shoppers and American Eagle is performing even better than both chains.
Aeropostale, which operated for years as the cheapest version of American Eagle and Abercrombie, has struggled to attract American teens outside its traditional formula of logos and low prices. At the same time, it's up against the same challenges its competitors are facing: declining mall traffic, the proliferation of fast fashion, rampant discounting and selling to a teen who's spending less on clothing.
"The whole segment has been under siege for a long time, and now with A&F getting a little more focused and back in their game and American Eagle back on track, it's creating more problems for Aeropostale," Allen Adamson, the founder of BrandSimple Consulting, said in an interview with BuzzFeed News. "There's too many brands fighting for this small sliver of teens in a way that looks mostly the same," he said.