Analysts: Aeropostale Inc Profits May Be Grounded Indefinitely

Aeropostale Inc.

could be grounded indefinitely, analysts said Thursday after the teen apparel retailer posted disappointing results. New York-based Aeropostal closed Thursday at $2.48 a share, down $0.71 cents a share. In the year to date, the company has lost more than 72 percent of its value. "No matter how many times the phrase 'return to profitability' is uttered, it may not come true," Wunderlich's Eric Bender said in a note. On Wednesday Aeropostale posted an 11 percent decline in same-store sales, its sixteenth consecutive quarter of flat or declining comps. The quarterly loss was $0.45 cents a share. A sales slowdown over Black Friday weekend "put a damper on holiday cheer," Topeka's Dorothy S. Lakner said in a note slashing her target to $2.50 a share, from $4. The same-store sales decline during the recent weekend "suggest a long road ahead in gaining mindshare among shoppers," Mizuho's Betty Chen said. Chen sees "continued earnings risk looming on the horizon," and maintained Neutral rating and $30 target, while trimming her forecast for the company. In September, the company named Julian Geiger Chief Executive as part of a turn-around effort. Geiger had served as CEO during Aeropostale's more halcyon days for four years up to 2010 and as chairman from 1998 to 2012. Recently Aeropostale signed up online celebrities including Bethany Mota and Nash Grier to help build its brand. But Bender said Grier "is known for his homophobic and racist remarks" and "has drawn backlash" on social media networks "Management needs be more prudent in its methodology" in selecting social media stars to gain relevancy, Bender said. The company expects to cut annual costs by $30 million to $35 million and will have closed 120 of its store fronts by year end, with up to 75 additional shutdowns expected in 2015.