After a 15% fourth-quarter same-store sales decline, Aeropostale is looking to accelerate the pace of previously announced store closures, further reduce an already limited store expansion program and has secured new financial flexibility from a private equity firm.
Sales and traffic at the teen retailer’s roughly 1,100 stores were in free fall for much of last year. The fourth-quarter comp decline of 15%, on top of an 8% decline the prior year, followed a comp decline of 15% in the third and second quarters. Sales during the 13-week fourth quarter declined to $670 million compared to $798 million during the 14-week fourth quarter the prior year. Even revenues from the company’s e-commerce business declined, dropping 12% to $85.6 million, as teens shunned the brand online as well as at the mall.
The company reported a net loss of $70 million, or 90 cents a share, which included charges totaling 55 cents a share. In conjunction with the release of its financial results, Aeropostale said it signed a commitment letter with Sycamore Partners and one the private equity firm’s holding company’s for a $150 million credit facility and product sourcing services. Sycamore is already an investor in the retailer and if it exercises convertible preferred stock granted at $7.25 a share it could end up owning 12.3% of the company. In addition, Aeropostale will now begin using a company controlled by Sycamore, MGF Sourcing, to diversify apparel production. Aeropostale said it will continue to award orders through a competitive bidding process but also said as part of the sourcing partnership it is required to complete minimum merchandise purchases each year for ten years.
"We are moving aggressively and taking swift actions across all areas of our business that we expect will improve our operational and financial performance over time,” said Aeropostale CEO Thomas Johnson. “The commitment letter for a strategic partnership and financing that we announced today more strongly positions the company and provides us with the flexibility to continue executing on our strategies designed to reposition the Aeropostale brand."
In addition, the company said it had retained a real estate consulting firm to investigate accelerating the pace of 50 planned store closing and other opport