Aeropostale Expect Steeper Q2 Loss - Update

(RTTNews) - Teen-focused apparel chain Aeropostale Inc. (ARO), said Thursday it expects second-quarter loss to be wider than earlier estimated, due mainly to weak sales and margins.

Challenges from weak consumer demand, product assortment issues, and increased promotional activity to fend off competition have hurt results, the company said in a statement.

Problems from low sales are more accentuated for retailers focused on teen customers, who are often dependent on others for their purchase requirements. Retailers are also faced with stiff competition and increased expenses, especially on promotions.

Shares of Aeropostale are down 2 percent in afternoon trade on the New York Stock Exchange.

The New York-based retailer now expects a second-quarter loss of $0.44 to $0.42 per share, including charges of $0.19 per share not disclosed in its original guidance of May, when it had forecast a loss of $0.20 to $0.15 per share.

On average, 27 analysts polled by Thomson Reuters expect a loss of $0.17 per share for the quarter. Analysts' estimates typically exclude special items.

The one-time charges include $0.11 per share of lower-than-expected income tax benefit and after-tax impairment charges of $0.06 per share.

Net sales for the quarter is expected to be down 6 percent to $454 million from $485 million a year ago period, and short of analysts' expectations of $460.62 million.

On a same-store basis, sales are forecast to slip 15 percent.

Aeropostale is scheduled to announce its second-quarter earnings on August 22.

Recently, rival American Eagle Outfitters Inc. (AEO) slashed its quarterly outlook due to weak sales and margins and now expect earnings of about $0.10 per share, from a prior range of $0.19 to $0.21 per share. Net sales fell 3 percent to $739.7 million.

Aeropostale stock is currently trading at $13.85, down $0.30 or 2.09%, on a volume of 4.3 million shares.