Aeropostale Inks Licensing Deal with Himatsingka America

Mall-based apparel retailer, Aeropostale, Inc. ARO announced that it has entered into a domestic licensing agreement with Himatsingka America, a home textile major with vast global reach. Shares of the company jumped over 9% on the news.

As per the deal, Himatsingka has been handed the task of designing, producing and distributing Aeropostale branded home textiles like bedding and bath linens to department stores, big box retailers and wholesale channels across North America.

Aeropostale believes this agreement will enable the company to expand its reach to new customers. The company's extended home collection is anticipated to hit the markets during the 2016 back-to-school season.

Aeropostale has been facing lack of demand for its products due to a challenging teen retail environment. Last month, the company even received a warning from the New York Stock Exchange (NYSE) since its share price dipped below $1. Per NYSE rules, non-compliance occurs if a company's average closing share price over a 30-day period is less than $1.

To battle dwindling revenues, the company has taken to international expansion in a big way. In July, the company entered into licensing agreements with India-based Arvind Lifestyle Brands Limited and Indonesia-based PT Mitra Adiperkasa TBK with an aim to expand in these countries. Given strong growth prospects in both India and Indonesia, Aeropostale expects good response from these markets.

This Zacks Rank #3 (Hold) company intends to extend its operations to over 300 locations across 17 countries by the end of 2015. Further, it plans to enter other global partnerships similar to the ones mentioned above through the rest of the year.

In addition, the company continues to undertake initiatives to transform and grow its brand. With sustained implementation of operational, marketing and merchandising strategies as well as its cost-curtailment program, Aeropostale hopes to turn around its performance.

Some better-ranked stocks in the retail space include Express Inc. EXPR, Foot Locker, Inc. FL and Citi Trends, Inc. CTRN. All three stocks carry a Zacks Rank #1 (Strong Buy).

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