Dive Brief:

• Teen apparel retailer Aeropostale has asked that a federal judge in bankruptcy court allow the company to pay up to $3.41 million in bonuses to 10 top executives, according to court papers detailed by Marketwatch.

• The bonus pay would be for those executives’ work for the retailer during the bankruptcy process and would be contingent on a successful exit from Chapter 11 and sales revenue goals.

• The teen apparel retailer also has asked for the ability to pay as much as $1.45 million in bonuses to 41 hard-to-replace workers, in an effort to retain them until Oct. 25, according to Marketwatch.

Dive Insight:

Even as it tries to regroup through the Chapter 11 process, it’s not clear that Aeropostale possesses the leadership or any strategy to replace its past logo-centric, hoodies-based business approach that has decidedly fallen out of favor with teens. Once more, some aren't sure how it can square its high quality with its low prices, or get a handle on just who is buying its clothes.

Aeropostale filed for Chapter 11 protection in April, and said then it would finance its operations with a $160 million loan from Crystal Financial, along with its operating cash flow. The company said at the time that it expects to emerge within six months having solved its dispute with shareholder Sycamore Partners, which had invested in the company and provided it a $150 million loan in 2014. 

In March, Aeropostale reported that Q4 same-store sales (including e-commerce) fell 6.7% year over year, a stark contrast to the rebounds seen at Abercrombie & Fitch and American Eagle Outfitters. Aeropostale closed 13 stores in the fourth quarter, while net sales decreased 16.1% year-over-year. 

But its tight margins have left it with little cash to play with, and the company now feels pressure to use it to keep people around after it lost key staff in recent weeks. 

“During this process, the [retailer] started experiencing the loss of some of their highly valuable employees throughout critical areas of their businesses,” according to court documents filed in U.S. Bankruptcy Court in Manhattan and cited by Marketwatch. “These voluntary resignations included members of the [retailer’s] leadership team and other employees that performed critical functions, including the [its] director of tax, director of strategy and customer insights, senior director of social media, senior director of operations procurement, and various regional managers.”