Aeropostale Earnings: Net Income Falls, Shares Drop 7%

Aeropostale Inc. (NYSE:ARO) reported a lower net income in the second quarter compared with a year earlier, falling below analysts’ estimates. 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. fell to $71,000 (0 cents per share) vs. $2.9 million (4 cents per share) a year earlier. This is a decline of 97.6% from the year-earlier quarter.

Revenue: Rose 3.7% to $485.3 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Aeropostale Inc. fell short of the mean analyst estimate of 5 cents per share. Analysts were expecting revenue of $490.1 million.

Quoting Management: Thomas P. Johnson, Chief Executive Officer, commented, “While we were encouraged by the customer response to our fashion offering, we were disappointed by our overall financial performance for the second quarter. Our core basics business experienced significant pricing pressure due to the highly promotional and competitive retail landscape. As a result, we promoted these businesses more aggressively than initially expected to end the quarter with inventories inline with our plan.”

Key Stats:

The company fell short of estimates last quarter after being in line with expectations the quarter before with net income of 13 cents.

Last quarter, gross margins grew to 25.3%, a 0.9 percentage point difference from the year-earlier quarter. This breaks a streak of two consecutive quarters of shrinking margins.

The comapny’s revenue has not increased in each of the last two quarters. In the first quarter, revenue increased 6% to $497.2 million from the year-earlier quarter.

Looking Forward: Next quarter’s results are expected to be more favorable for the company. Over the past sixty days, the average estimate for the third quarter has reached 44 cents per share, up from 42 cents. Over the past three months, the average estimate for the fiscal year has climbed from $1.18 per to share to $1.28.

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

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