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Aeropostale Losses Widen in Q1

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Aeropostale

Things appear to be going from bad to worse for Aeropostale.

The teen retailer, which filed for Chapter 11 in May, said Wednesday that its net loss widened to $58.4 million ($0.73 diluted loss per share) in the 13 weeks ended Apr. 30, compared to $45.3 million ($0.57 diluted loss per share) during the same period last year.

Further, a regulatory filing with the Securities and Exchange Commission (SEC) showed that net sales were $298.6 million in Q1 2016, significantly lower than net sales in Q1 2015 ($318.6 million).

Aeropostale said that decreased mall traffic was to blame for its financial difficulties. The retailer also noted that consumer demand has shifted away from apparel to technology and personal experiences. Today’s retail market has contributed to the company’s decline, too, since stores are becoming more competitive about reputation and promotions. Lastly, it said that its customers have changed their shopping preferences.

To enhance its liquidity position, Aeropostale has implemented several initiatives, including amending its credit facility with Bank of America, forming a plan to revamp the P.S. from Aeropostale business, reduce costs and close underperforming Aeropostale stores in the U.S. and Canada.

After a strategic business review in Q4 2015, Aeropostale initiated an aggressive cost reduction program, which reduced about 100 corporate positions (13 percent of jobs) at the end of fiscal year 2015.

During the first quarter of 2016, Aeropostale’s board of directors were debating strategic alternatives, including selling or reconstructing the company. Since filing for bankruptcy, Aeropostale has been reviewing its leases and said it will continue to reassess its business strategy for long-term success.

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