Aeropostale Earnings: Here’s Why Shares Dipping

Aeropostale Inc. (NYSE:ARO) reported net income above Wall Street’s expectations for the third quarter. Aeropostale is a mall-based retailer that sells casual apparel and accessories for young adults.

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Aeropostale Inc. Earnings Cheat Sheet

Results: Net income for Aeropostale Inc. rose to $24.9 million (31 cents per share) vs. $24.1 million (30 cents per share) in the same quarter a year earlier. This marks a rise of 3.5% from the year-earlier quarter.

Revenue: Rose 1.6% to $605.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Aeropostale Inc. reported adjusted net income of 44 cents per share. By that measure, the company beat the mean estimate of 29 cents per share. It beat the average revenue estimate of $490.1 million.

Quoting Management: Thomas P. Johnson, Chief Executive Officer, commented, “For the third quarter, we achieved net earnings slightly ahead of our previously issued guidance. Although we experienced pressure on our women’s core basics business, she responded positively to our fashion offering. In addition, our men’s and accessories businesses performed well.”

Key Stats:

After four consecutive quarters of year-over-year profit drops, the company reported a profit increase last quarter. In the second quarter, net income fell 97.6% from the year earlier, while the figure fell 35.4% in the first quarter, 68.9% in the fourth quarter of the last fiscal year and 58.8% in the third quarter of the last fiscal year.

Revenue has now increased for three consecutive quarters. In the second quarter, revenue rose 3.7% to $485.3 million while the figure rose 6% in the first quarter from the year earlier.

The company beat estimates last quarter after being in line with expectations in the second quarter with 0 cents per share.

Looking Forward: Over the last 30 days, analysts have not been optimistic about the company’s next-quarter performance. The average estimate for the fourth quarter is now 54 cents per share, down from 55 cents. For the fiscal year, the average estimate has moved down from 98 cents a share to 96 cents over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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