Struggling teen apparel retailer Aéropostale filed for Chapter 11 bankruptcy protection on Wednesday, falling victim to years of losses as fast fashion chains like Forever 21 ate into its market share, and long time rivals Abercrombie & Fitch (AND) and American Eagle Outfitters (AEO) proved better at adapting to the changing tastes of young shoppers.
Aéropostale is going through the bankruptcy process in part to shed unprofitable stores and trim down its fleet, as those locations have been a major drain on its delicate finances.
The retailer announced it would close 154 stores (113 in the U.S. and 41 in Canada). Some 117 of those lost money last year, and the rest generated little to no profit.
Aéropostale’s strategy for getting back on its feet is “to right-size their operations by closing unprofitable stores. Such closures will help stem the Debtors’ significant cash burn, increase the Debtors’ liquidity, and allow the Debtors to focus their reorganization efforts around a smaller footprint of more profitable store,” the company said in its bankruptcy filing.
The company joins Wet Seal, Quicksilver, Pacific Sunwear, Sports Authority, and Vestis Retail (parent of Eastern Mountain Sports) among the ranks of retailers seeking bankruptcy protection from the courts in the last 16 months.
Here are the U.S. stores Aéropostale is closing, taken from the company’s filing this morning.
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As someone deeply entrenched in the retail industry, I've closely followed the challenges faced by various apparel retailers, including the recent news about Aéropostale filing for Chapter 11 bankruptcy protection. My expertise in the field allows me to shed light on the intricacies involved and provide valuable insights.
Aéropostale's decision to file for Chapter 11 bankruptcy is a result of years of financial struggles exacerbated by the evolving landscape of fast fashion. Competitors like Forever 21, Abercrombie & Fitch, and American Eagle Outfitters have adapted more effectively to the changing preferences of young shoppers, posing a significant challenge to Aéropostale's market share.
One key aspect of Aéropostale's bankruptcy strategy is the closure of 154 stores, with a majority (113) located in the U.S. and the remaining 41 in Canada. The company aims to shed unprofitable stores and streamline its operations to alleviate the financial burden caused by these underperforming locations. Out of the stores being closed, 117 operated at a loss in the previous year, while the remaining stores generated minimal to no profit.
Aéropostale's approach involves "right-sizing" its operations by focusing on a smaller footprint of more profitable stores. This strategic move is aimed at reducing cash burn, increasing liquidity, and enabling the company to concentrate its reorganization efforts on a more financially viable store portfolio.
The decision by Aéropostale to join the ranks of retailers seeking bankruptcy protection, including names like Wet Seal, Quicksilver, Pacific Sunwear, Sports Authority, and Vestis Retail (parent of Eastern Mountain Sports), highlights the broader challenges faced by the retail industry in recent months.
In conclusion, the bankruptcy filing of Aéropostale is a consequence of a complex interplay of market dynamics, competition, and the need for strategic restructuring in response to financial difficulties. The retail landscape continues to evolve, and these developments serve as valuable lessons for industry stakeholders navigating the ever-changing consumer preferences and market trends.
FAQs
In 2016, the company filed for bankruptcy and closed over 100 stores after falling out of favor with teenage consumers. Today, Aéropostale has close to 500 locations across the US and over 4 million followers on Instagram.
Why so many stores closing in usa? ›
The retail industry is going through a tough time as it copes with inflation-weary consumers and a rash of bankruptcies, prompting chains to announce the closures of almost 3,200 brick-and-mortar stores so far in 2024, according to a new analysis.
What happened with Aéropostale? ›
2016 bankruptcy
After thirteen consecutive quarters of losses, the company was delisted from the New York Stock Exchange on April 22, 2016, and began trading under the symbol "AROP" as an over-the-counter stock. Aéropostale filed for Chapter 11 bankruptcy on May 4, 2016, with assets of $354 million.
Why is Aéropostale not popular anymore? ›
Experts tell Retail Dive that Aeropostale sealed its fate by hewing too closely to trends set by the so-called “other two As'”—especially Abercrombie & Fitch, which under then-CEO Mike Jeffries virtually defined teen fashion in the previous decade—and failed to develop a vision of its own.
What is the sister store to Aéropostale? ›
SPARC Group LLC ("SPARC Group") is a fashion industry leader that designs, sources, manufactures, distributes, and markets women's, men's, and kids apparel and accessories in key markets worldwide for iconic brands including Aéropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand, Nautica and Reebok.
How many Aéropostale stores are there in the US? ›
Aéropostale embraces positivity, inclusivity, and acceptance at over 500 locations across the United States and Puerto Rico, nearly 800 stores internationally, plus 24/7 at aeropostale.com. Through great clothes, thoughtful partnerships, and meaningful experiences, Aéropostale aims to inspire confidence for all.
What retailers are in trouble in 2024? ›
"A lot of this year's closures are related to bankruptcies of chains that have been in trouble for a while, like Rite Aid and Rue21," Neil Saunders, managing director of GlobalData, told CBS MoneyWatch. "We're also seeing several retailers, like Family Dollar, take action to weed out underperforming locations."
Why is Walmart changing their name? ›
While Wal-Mart Stores as a corporate legal name is rarely used in public-facing materials or in stores themselves, CEO Doug McMillon said in a statement that he felt the name change was needed to be “consistent with the idea that you can shop us however you like as a customer.”
Which Walmart is closing in 2024? ›
In the Golden State, the closure of branches was recorded in San Diego, El Cajón, West Covina, Granite Bay and Fremont; while the closure in Ohio occurred in Columbus. In Maryland, Walmart shuttered the store in Townson, in Colorado it was in Aurora, and in Wisconsin the closure took place in Milwaukee.
What age group wears Aeropostale? ›
The new chain, called P.S. from Aeropostale, targets the slightly younger siblings of the core Aeropostale teenaged customers, ages 14-17. That age group, 7 to 12, dubbed "tweens" for the years between early childhood and teenager, doesn't have a mall store to call its own, and Aeropostale aims to give them one.
In 2016, Authentic Brands Group purchased Aeropostale out of bankruptcy for $240 million. Marc Miller, CEO of the joint venture SPARC, made up of ABG and Simon Property Group, set off to turn the brand around.
Are Aeropostale and Hollister the same company? ›
Aeropostale is an independent company. In fact, the do own many other clothing brands themselves. Hollister Co. on the other hand is part of the Abercrombie & Fitch company.
What does R mean at Aeropostale? ›
R stands for Regular Inseam which is 26 inches (Approx.). Our customers feel that Aeropostale jeans are sized smaller than other brands. If you wear 28, buy 30 for this brand.
Is Aeropostale a sweatshop? ›
Viewing all content: Aeropostale
Style Avenue was found to have multiple and repeated labor rights violations, including forced overtime, illegal terminations, verbal abuse by management, failure to respect freedom of association, locking workers in the factory, excessive heat, and unsanitary conditions.
Are American Eagle and Aeropostale the same company? ›
Aéropostale is one of American eagle outfitters' main competitors. The company was established in 1987 by Bryan Alberto. The company has a total of 1,008 stores spread across North America, Central America, and the Middle East. In 2005, the company established an online store.
Why did J Crew go out of business? ›
After going bankrupt in 2020 due to the pandemic, J. Crew has experienced a comeback. Business of Fashion compared J. Crew's post-bankruptcy comeback strategy favorably last year, crediting the hiring of Gayot and Babenzien with bringing customers back.
Why did Abercrombie and Fitch go out of business? ›
The slow sales were due in part to the company's controversies, but also due to shifts among the younger demographic. Teens had grown tired of logo t-shirts and hoodies and started opting for cheaper, fast-fashion brands like Forever 21. Nike took over as teens' aspirational brand.
What brand owns Aéropostale? ›
Authentic Brands Group
| Company type | Private |
|---|
| Revenue | $22.5 billion (2021) |
| Owners | CVC Capital Partners HPS Investment Partners |
| Subsidiaries | Aéropostale Brooks Brothers Eddie Bauer Forever 21 Nine West Nautica Prince Reebok Rockport Spyder Tapout Thomasville Vision Street Wear |
| Website | authenticbrandsgroup.com |
5 more rowsAéropostale is one of American eagle outfitters' main competitors. The company was established in 1987 by Bryan Alberto. The company has a total of 1,008 stores spread across North America, Central America, and the Middle East. In 2005, the company established an online store.
