The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from PR Newswire

Aeropostale Reports Results for Fourth Quarter and Fiscal 2012

Thursday, March 14, 2013

Aeropostale Reports Results for Fourth Quarter and Fiscal 201216:01 EDT Thursday, March 14, 2013Fourth Quarter Loss of $0.01 Per Diluted Share Adjusted Earnings of $0.24 Per Diluted Share In-Line with Previously Issued Guidance of $0.20 to $0.24 Provides First Quarter Fiscal 2013 GuidanceNEW YORK, March 14, 2013 /PRNewswire/ -- Aeropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of casual apparel for young women and men, today reported results for the fourth quarter of 2012 (the fourth quarter of fiscal 2012 consisted of 14 weeks compared to the fourth quarter of fiscal 2011, which consisted of 13 weeks) and fiscal 2012 (fiscal 2012 consisted of 53 weeks compared to fiscal 2011, which consisted of 52 weeks).  The Company also provided guidance for the first quarter of fiscal 2013.Fourth Quarter PerformanceFor the fourth quarter of fiscal 2012, net sales decreased 1% to $797.7 million, from $808.4 million in the year ago period. Fourth quarter comparable sales, including the e-commerce channel, decreased 8% compared to a 7% decrease for the corresponding 14-week period of the prior year.  Fourth quarter comparable store sales, excluding the e-commerce channel, decreased 9%, compared to a decrease of 9% for the corresponding 14-week period of the prior year.  The Company reported a net loss for the fourth quarter of fiscal 2012 of $0.7 million, or $0.01 per diluted share, which included an after-tax charge of $19.7 million, or $0.25 per diluted share, resulting from store asset impairment charges.  The Company reported net income of $26.1 million, or $0.32 per diluted share, for the fourth quarter of 2011, which included an after-tax charge of $9.5 million, or $0.12 per diluted share, resulting from store asset impairment charges.Excluding the aforementioned store asset impairment charges, the Company reported adjusted net income of $19.1 million, and adjusted earnings of $0.24 per diluted share in the fourth quarter of 2012 (see Exhibit D).  This compares to the Company's previously issued guidance of $0.20 to $0.24 per diluted share, which did not include the aforementioned charges.  Also excluding store asset impairment charges, the Company reported adjusted net income of $35.6 million, or $0.44 per diluted share, for the fourth quarter of the prior year.Full Fiscal Year PerformanceNet sales for fiscal 2012 increased 2% to $2.386 billion, from $2.342 billion in the year ago period. Fiscal 2012 comparable sales, including the e-commerce channel, decreased 2% compared to an 8% decrease for the comparable 53-week period of the prior year.  Fiscal 2012 comparable store sales, excluding the e-commerce channel, decreased 4%, compared to a decrease of 9% for the comparable 53-week period of the prior year.Net income for fiscal 2012 was $34.9 million, or $0.43 per diluted share, which included an after-tax charge of $19.7 million, or $0.25 per diluted share, resulting from store asset impairment charges.  Net income for fiscal 2011 was $69.5 million, or $0.85 per diluted share, which included the following items:Store asset impairment charges of $9.1 million after tax, or $0.11 per diluted, recorded during the fourth quarter of fiscal 2011, partially offset by A benefit of $5.3 million after tax, or $0.06 per diluted share, from the previously disclosed resolution of a dispute with one of the Company's sourcing agents related to prior period allowances in the second quarter of fiscal 2011. Excluding these items in both years, adjusted net income for fiscal 2012 was $54.7 million, or $0.68 per diluted share, compared to adjusted net income for fiscal 2011 of $73.3 million, or $0.90 per diluted share (see Exhibit D). Thomas P. Johnson, Chief Executive Officer, commented, "Our results for the fourth quarter and fiscal year were disappointing; however, we made progress during 2012 against our strategic initiatives.  We added new talent to our team, injected more relevant fashion into our assortments, and developed our next generation store model.  Further, we continued to build positive momentum in our P.S. business, extended our global reach by opening in new markets, and grew our e-commerce business, which included the successful acquisition of GoJane.com.  While we have not reached the level and consistency in our performance for which we strive, we are committed to evolving and transforming our product to position ourselves as a true lifestyle brand."E-commerceNet revenues from the Company's e-commerce business for the fourth quarter of fiscal 2012, including net revenues from the GoJane business beginning November 14, 2012, increased 16% to $96.8 million, from $83.2 million in the year ago period.  Net revenues from the Company's e-commerce business for fiscal 2012 increased 19% to $217.0 million, from $182.1 million in the year ago period.Cash Positioning and Share Repurchase ProgramThe Company ended fiscal 2012 with cash and cash equivalents of $231.5 million and no debt. The Company repurchased 3.0 million shares of common stock for approximately $40.8 million during fiscal 2012.  The Company currently has $104.4 million of availability remaining under its share repurchase program.First Quarter GuidanceFor the first quarter of fiscal 2013, the Company expects to report a loss in the range of $0.15 to $0.20 per diluted share, compared to earnings of $0.13 per diluted share last year. Mr. Johnson continued, "We anticipate a challenging first quarter as a result of expected margin pressures from Holiday carryover inventory, and the impact of a weak macroeconomic environment.  We will continue to plan our business conservatively and manage our cost structure carefully.  While we face near-term challenges, we believe we have the right strategies and the right team in place to improve the trajectory of our business."Store Growth and Capital Spending for Fiscal 2013For fiscal 2013, the Company plans to open approximately 14 Aeropostale stores, approximately 60 P.S. from Aeropostale stores, remodel approximately 30 stores, and close approximately 15 to 20 Aeropostale stores.  The Company expects to invest approximately $89.0 million in its store growth and certain information technology.  This compares to capital expenditures of approximately $72.3 million in fiscal 2012.Conference Call InformationThe Company will be holding a conference call today at 4:15 P.M. ET to review its fourth quarter results. The broadcast will be available through the 'Investor Relations' link at www.aeropostale.com and www.fulldisclosure.com.  To listen to the broadcast your computer must have Windows Media Player installed. If you do not have Windows Media Player go to the latter site prior to the call, where you can download the software for free. Use of Non-GAAP MeasuresThe Company believes that the disclosure of adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures, provides investors with useful information to help them better understand the Company's results (see Exhibit D).  About Aeropostale, Inc.Aeropostale®, Inc. is a primarily mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aeropostale® stores and 4 to 12 year-old kids through its P.S. from Aeropostale® stores. The Company provides customers with a focused selection of high quality fashion and fashion basics at compelling values in an innovative and exciting store environment. Aeropostale® maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. Aeropostale® products can only be purchased in Aeropostale® stores and online at www.aeropostale.com. P.S. from Aeropostale® products can be purchased in P.S. from Aeropostale® stores and online at www.ps4u.com and www.aeropostale.com. The Company currently operates 906 Aeropostale® stores in 50 states and Puerto Rico, 78 Aeropostale stores in Canada and 103 P.S. from Aeropostale® stores in 22 states. In addition, pursuant to various licensing agreements, our licensees currently operate 28 Aeropostale® and P.S. from Aeropostale® stores in the Middle East, Asia and Europe.  On November 13, 2012, Aeropostale, Inc. acquired substantially all of the assets of online women's fashion footwear and apparel retailer GoJane.com, Inc. Based in Ontario, California, GoJane.com focuses primarily on fashion footwear, with a select offering of contemporary apparel and other accessories.SPECIAL NOTE: THIS PRESS RELEASE AND ORAL STATEMENTS MADE FROM TIME TO TIME BY REPRESENTATIVES OF THE COMPANY CONTAIN CERTAIN "FORWARD-LOOKING STATEMENTS" CONCERNING EXPECTATIONS FOR SALES, STORE OPENINGS, GROSS MARGINS, EXPENSES, STRATEGIC DIRECTION AND EARNINGS.  ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER INCLUDE, CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF NEW PRODUCTS OR PRICING CHANGES BY OUR COMPETITORS, CHANGES IN THE ECONOMY AND OTHER EVENTS LEADING TO A REDUCTION IN DISCRETIONARY CONSUMER SPENDING; SEASONALITY; RISKS ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER CONDITIONS AND THE POSSIBLE ADVERSE IMPACT OF CHANGES IN IMPORT RESTRICTIONS; RISKS ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT ITS GROWTH STRATEGIES, AS WELL AS THE OTHER RISK FACTORS SET FORTH IN THE COMPANY'S FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS.  READERS ARE REFERRED TO THOSE SEC FILINGS. EXHIBIT AAEROPOSTALE, INC.CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)(Unaudited)February 2, 2013January 28, 2012ASSETSCurrent Assets:  Cash and cash equivalents $231,501$223,712  Merchandise inventory 155,463163,522  Other current assets 53,60354,565     Total current assets 440,567441,799Fixtures, equipment and improvements, net 263,512287,393Goodwill and intangible assets28,599-Other assets 9,3036,041TOTAL ASSETS $741,981$735,233LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:  Accounts payable $89,991$103,476  Accrued expenses 114,70089,735     Total current liabilities 204,691193,211Other non-current liabilities 126,974132,588Stockholders' equity 410,316409,434TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $741,981$735,233 EXHIBIT BAEROPOSTALE, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ANDSELECTED STORE DATA (In thousands, except per share and store data)(Unaudited)14 weeks ended13 weeks endedFebruary 2, 2013January 28, 2012% of sales% of salesNet sales  $797,709100.0%$808,380100.0%Cost of sales (including certain buying, occupancy and warehousing expenses) 1639,14180.2%612,25075.7%Gross profit 158,56819.8%196,13024.3%Selling, general and administrative expenses  158,83419.9%155,30519.2%Income (loss) from operations  (266)-0.1%40,8255.1%Interest expense, net 1390.0%1170.0%Income (loss) before income taxes (405)-0.1%40,7085.1%Income taxes 2660.0%14,6091.8%Net income (loss)$(671)-0.1%$26,0993.3%Basic earnings (loss) per share $(0.01)$0.32Diluted earnings (loss) per share $(0.01)$0.32Weighted average basic shares 78,27280,757Weighted average diluted shares 78,27281,472STORE DATA:Comparable sales change (including e-commerce channel) -8%-7%Comparable store sales change (excluding e-commerce channel) -9%-9%Stores open at end of period 1,0841,057Total square footage at end of period 4,013,5213,909,196Average square footage during period 4,048,4353,910,2421 Cost of sales for the fourth quarter of fiscal 2012 was unfavorably impacted by store asset impairment charges of $32.6 million ($19.7 million after tax, or $0.25 per diluted share).   Cost of sales for the fourth quarter of fiscal 2011 was unfavorably impacted by store asset impairment charges of $14.8 million ($9.5 million after tax, or $0.12 per diluted share).     EXHIBIT CAEROPOSTALE, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME ANDSELECTED STORE DATA (In thousands, except per share and store data)(Unaudited)53 weeks ended52 weeks endedFebruary 2, 2013January 28, 2012% of sales% of salesNet sales  $2,386,178100.0%$2,342,260100.0%Cost of sales (including certain buying, occupancy and warehousing expenses) 11,796,82175.3%1,733,91674.0%Gross profit 589,35724.7%608,34426.0%Selling, general and administrative expenses  529,84622.2%494,82921.1%Income from operations  59,5112.5%113,5154.9%Interest expense, net 4850.0%4170.0%Income before income taxes 59,0262.5%113,0984.9%Income taxes 24,1031.0%43,5831.9%Net income $34,9231.5%$69,5153.0%Basic earnings per share $0.44$0.86Diluted earnings per share $0.43$0.85Weighted average basic shares 80,06981,208Weighted average diluted shares 80,49481,811STORE DATA:Comparable sales change (including e-commerce channel) -2%-8%Comparable store sales change (excluding e-commerce channel) -4%-9%Average square footage during period 3,998,3613,832,5801Cost of sales for fiscal 2012 was unfavorably impacted by store asset impairment charges of $32.6 million ($19.7 million after tax, or $0.25 per diluted share) recorded during the fourth quarter.  Cost of sales for fiscal 2011 was unfavorably impacted by store asset impairment charges of $14.8 million ($9.1 million after tax, or $0.11 per diluted share) recorded during the fourth quarter.  In fiscal 2011, this amount was partially offset by a favorable benefit of $8.7 million ($5.3 million after tax, or $0.06 per diluted share) resulting from the resolution of a previously disclosed dispute with one of our sourcing agents that was recorded during the second quarter of fiscal 2011.  Additional store asset impairment charges of $1.2 million ($0.8 million after tax) were recorded during the third quarter of fiscal 2011.   EXHIBIT DAEROPOSTALE, INC.RECONCILIATION OF NET INCOME (LOSS) AND DILUTED EARNINGS PER SHARE(In thousands, except per share data)(Unaudited)The following table presents a reconciliation of net income (loss) and diluted earnings per share ("EPS") on a GAAP basis to the non-GAAP adjusted basis discussed in this release.  14 weeks ended13 weeks endedFebruary 2, 2013January 28, 2012Net Income (Loss)Diluted EPSNet IncomeDiluted EPSAs reported  $(671)$(0.01)$26,099$0.32Asset impairment charges recorded during thefourth quarter of the respective fiscal year  19,7380.259,4770.12As adjusted  $19,067$0.24$35,576$0.4453 weeks ended52 weeks endedFebruary 2, 2013January 28, 2012Net IncomeDiluted EPSNet IncomeDiluted EPSAs reported  $34,923$0.43$69,515$0.85Asset impairment charges recorded during the fourth quarter of the respective fiscal year 1 19,7380.259,0820.11Vendor dispute resolution 2  --(5,345)(0.06)As adjusted  $54,661$0.68$73,252$0.901The Company recorded store asset impairment charges of $1.2 million ($0.8 million after tax) during the third quarter of fiscal 2011.2During the second quarter of 2011, we recorded a favorable benefit of $8.7 million ($5.3 million after tax, or $0.06 per diluted share) resulting from the resolution of a previously disclosed dispute with one of our sourcing agents.  Company Contact: Kenneth Ohashi/VP, Investor & Media Relations (646) 452-1876 or kohashi@aeropostale.com Media Contact: Leigh Parrish, FTI Consulting(212) 850-5600SOURCE Aeropostale, Inc.