Aeropostale Seeks to Stem Six Quarters of Losses


Teen apparel retailer Aeropostale Inc said it had reappointed Julian Geiger as chief executive as it seeks to win back customers and stanch six quarters of losses.

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The company's shares rose as much as 11 percent in extended trading on Monday.

Geiger, 63, was CEO of the retailer from 1996 to 2009, and drove up sales at Aeropostale to $1.9 billion in 2008, from $140 million in 1998. Geiger, who joins with immediate effect, will also continue to serve as a member of the board .

Geiger replaces Thomas Johnson, who has held the position since 2010.

The company has struggled to keep pace with changing fashion trends and attracting its mostly teen customers, who are cutting back on spending amid a weak job market and low wage growth.

Like other teen apparel retailers, Aeropostale has also been losing out to fast-fashion brands such as H&M, Forever 21 and Inditex's Zara, which bring the latest styles from the runway to their stores within weeks.

Aeropostale said it expects a loss of 42-45 cents per share, excluding items, for the second quarter ended Aug. 3. It had earlier forecast a loss of 55-61 cents per share.

Analysts on average were expecting a loss of 58 cents, according to Thomson Reuters I/B/E/S.

Morgan Stanley analysts had warned in May that the company could raise going concern doubts next year as it burns up cash amid mounting losses.

Many large retailers that cater to low- and middle-income consumers reported disappointing quarterly sales at their established stores last week, pointing to a cutback in spending on discretionary items.

The teen retailer said revenue fell 13 percent to $396.2 million in the second quarter. Sales at stores open for at least a year fell 13 percent, making it the eighth straight quarterly comparable sales decline.

Rival American Apparel Inc also said same-store sales fell 6 percent, while revenue was flat in the second quarter ended June 30.

Urban Outfitters Inc also reported flat same-store sales growth in the quarter ended July 31.

Excluding items, Aeropostale expects operating losses between $36 million-$38 million in the quarter, lower than its previous forecast of $49 million-$54 million.

Aeropostale shares were up 3.7 percent at $3.36 in after- market trading. Up to Monday's close, the stock has fallen 64 percent this year.