Zacks Equity Research
It seems that investors are losing confidence in Aeropostale, Inc. (ARO), after this specialty retailer of casual apparel and accessories, posted soft third-quarter fiscal 2014 results. Shares have dropped 29.8% since the earnings announcement on Dec 3, whereas year-to-date, the stock has plunged 75.3%. Yesterday, the stock reached a 52-week low of $2.13.
Estimates for Aeropostale have been portraying a downtrend since the company delivered its third-quarter results. It seems that analysts have become less constructive on the stock's future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that tumbled to a loss of $1.83 from a loss of $1.80 for fiscal 2014 in the past 7 days. For fiscal 2015, the Zacks Consensus Estimate of loss slid to $1.23 from $1.09 over the same time frame.
The New York-based company disappointed on the sales front. Aeropostale’s net sales plunged 12% to $452.9 million, while comparable-store sales, including the eCommerce channel, declined 11% year over year. On the other hand, adjusted loss came in at 45 cents per share, in line with the Zacks Consensus Estimate, but much wider than the prior-year quarter’s loss per share of 29 cents.
Weak traffic and aggressive promotions, along with competition from other teen retailers continue to mar Aeropostale’s performance. The company, under its CEO, Julian R. Geiger, continues to undertake initiatives to transform and grow its brand. With sustained implementation of operational, marketing and merchandising strategies, coupled with its cost-curtailment program, this Zacks Rank #3 (Hold) company hopes to turn around its performance.
Other Stocks Worth Considering
Better-ranked retail stocks that look promising and are expected to continue with their upbeat performance include Columbia Sportswear Co. (COLM) and G-III Apparel Group, Ltd.(GIII), both sporting a Zacks Rank #1 (Strong Buy), and Hanesbrands Inc. (HBI), carrying a Zacks Rank #2 (Buy).
