Wall Street Watch Friday: Aeropostale Experiencing Turbulence


Business appears to be grounded at Aeropostale (ARO).

The once trendy mall retailer posted uninspiring quarterly results on Thursday after the market close, and the back-to-school shopping season is shaping up to be an even bigger disappointment.

Aeropostale posted breakeven results on a ho-hum 4% uptick in sales. Comparable store sales slipped 1% -- and that's coming after a brutal 14% decline during last year's fiscal second quarter. Usually specialty retailers bounce back after double-digit dives.
Aeropostale's more pressing concern is its guidance for the current quarter. We're now in back-to-school season, but it's looking more like "back-to-cruel" for Aeropostale.

A soft start to the quarter and "inconsistent" trends finds the teen apparel retailer targeting just $0.25 a share to $0.30 a share in profitability during this telltale quarter. That's not sitting well with analysts that were holding out for net income of $0.38 a share.

Aeropostale is hoping to find growth in even younger customers than the teens visiting its namesake stores in fewer numbers. It's opening more P.S. from Aeropostale stores that stock trendy clothing for toddlers and pre-teens. That may be a smart strategy down the road, but for now Aeropostale isn't going anywhere.

Other things worth watching

• Aeropostale blamed "the highly promotional and competitive retail landscape" for its problems, but some of its rivals are holding up just fine. Gap (GPS) also posted quarterly results late Thursday afternoon, but the parent company of Old Navy, Banana Republic, and Gap concepts pleased investors. Gap even raised its near-term outlook. Aeropostale may need a new scapegoat.

• Turning to tech, Marvell Technology (MRVL) stumbled in its latest quarter. Analysts were expecting the communications equipment maker to post year-over-year dips in revenue and earnings, but Marvell managed to post even lower results on both ends of the income statement. The market's a fickle beast that doesn't forgive quarterly hiccups.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Aeropostale.

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