Struggling specialty chain Aéropostale on Tuesday revealed plans to cut about 100 corporate jobs by the end of the month, reducing its head-office headcount by 13 percent.
The once-popular teen retailer said the layoffs are part of “an aggressive new cost reduction program targeting both direct and indirect spending across the organization,” which it expects to generate annual pre-tax savings of as much as $40 million in fiscal 2016.
It also said it expects these measures to result in cash expenses of around $1.5 million, before tax, for the fiscal year ending Jan. 31.
“The decisions that led to today’s actions are a result of our focus on Aéropostale’s future and our goal of returning to profitability,” Julian Geiger, chief executive officer for the New York-based retailer, stated.
In addition, the company announced that Geiger had voluntarily relinquished one million stock options, which will now be used “solely for the purposes of motivating and retaining other key members of the organization.” Aéropostale’s stock is currently trading at an unappealing $0.24 per share.
It’s been a shaky few years for the mall-based mainstay, which fell out of favor with teens in much the same way that fellow preppy chains Abercrombie & Fitch and American Eagle did. The retailer is expecting a fourth-quarter net loss in the range of $0.04 to $0.17 per diluted share, excluding the impact of headcount reductions and any previously announced store closures. Its operating losses for the period, meanwhile, are projected to be anywhere from zero to $10 million.
Geiger continued, “The reiteration of our fourth-quarter guidance demonstrates sequential improvement from a sales and operating loss perspective. We are building upon areas of progress and continue to work to improve our business.”
It’s hard to see any light at the end of the tunnel, however. For the 13 weeks ended Oct. 31, Aéropostale reported a 20 percent loss plunge in sales to $363.3 million and a 10 percent drop in comparable sales. The company currently operates 755 stores in 50 states and Puerto Rico and 41 in Canada, as well as 25 P.S. from Aéropostale stores in 12 states.