Aeropostale failing to recover with another weak quarter

Dive Brief:

Teen apparel retailer Aeropostale Thursday said Q4 same-store sales, which includes e-commerce, fell 6.7% year over year, a stark contrast to the rebounds seen at rivals Abercrombie & Fitch and American Eagle Outfitters. The company closed 13 Aeropostale stores in the fourth quarter.
Fourth quarter net sales decreased 16.1% to $498 million, from $593.8 million year over year, missing estimates of a net loss of $519.69 million.
The retailer also announced that it was exploring strategic alternatives, with the board authorizing management to look into a sale or restructuring of the company. Aeropostale's shares plummeted as much as 54% on the news.

Dive Insight:

CEO Julian R. Geiger said in a statement that the company met its own expectations in Q4 and that consumers are responding well to its spring merchandise.

“[T]he initial reaction to both our Spring product and our two-chain Factory and Mall strategy is very encouraging with comparable sales turning positive since our Factory Chain launch at the end of February,” he said in a statement.

But the retailer hasn’t eked out the kind of positive results reported by rivals Abercrombie & Fitch and American Eagle Outfitters, which have signaled a strong turnaround at those retailers. All three retailers are still facing increased competition from fast-fashion and online, declining mall traffic, and a shifting preference to spending on experiences rather than clothes.

Merchandising changes have enabled Abercrombie and American Eagle to ease up on heavy discounting in addition to selling more. Both have gone away from the logo-heavy looks from the 90s, instead focusing on quality and decreasing inventory levels. American Eagle found success in upping the quality of its jeans, while Abercrombie has taken a more adult approach to merchandising recently.

Aeropostale's strategy has been to focus on essentials, with the goal to provide teens with a basic "uniform" of T-shirts and jeans. CEO Julian Geiger said that the company will focus on its stores in the upcoming years, which includes rolling out Factory Stores that focus on more basic items.

"We believe that there is a significant opportunity to improve the results of these stores in the near-term by continuing to return to our roots in terms of merchandise, presentation and promotion," Geiger said in an earnings call.