AÃ©ropostale Inc., the mall-based apparel retailer for young men and women, dropped the most in 21 months after forecasting a bigger loss than experts estimated.
First quarter of fiscal 2014 net sales decreased 12 percent to $395.9 million. Net revenues from the company’s e-commerce business dropped 18 percent to $34.3 million from $41.9 million during the same period last year.
For the second quarter, operating losses will be in the range of $49 to $54 million, or a net loss in the range of $0.55 to $.61 per share, the company revealed in a statement.
Thomas P. Johnson, the retailer’s chief executive officer, acknowledged the company faced multiple challenges including aggressive promotions, lower mall traffic and unseasonable weather. “While our overall results were disappointing, we were able to exceed guidance and end the quarter with inventories well-controlled. Additionally, at the close of the quarter, we took additional actions to build on our turnaround efforts from the past year, restructuring our P.S. from AÃ©ropostale business and expanding our expense savings programs,” he explained.
Additionally, the retailer confirmed Tuesday that it has entered into definitive agreements with private equity firm Sycamore Partners, which announced a $150 million loan in March. The five year $100 million term loan facility and 10 year $50 million term loan facility includes a strategic partnership with Sycamore-affiliated MGF Sourcing, which is poised to diversify AÃ©ropostale’s production and further optimize its supply chain, the company stated. As AÃ©ropostale fulfills its minimum purchase requirements under the new sourcing partnership, all amortization payments of the associated term loan facility will be rebated.
Under the agreement Stefan Kaluzny, managing director at Sycamore Partners, and Julian Geiger, former director and chief executive officer of Crumbs Bake Shop and former chairman and chief executive officer of AÃ©ropostale, Inc. will join AÃ©ropostale’s Board of Directors. Arthur Rubinfeld will step down as director.
In a statement Kaluzny noted, “We continue to believe there is tremendous value in AÃ©ropostale’s business. We are very pleased to partner with the company’s other board members and management team to help AÃ©ropostale realize the full potential of its brand.”