Dive Brief:

• Aeropostale Inc. has ended a simmering dispute with one of its suppliers as it plans its reorganization under bankruptcy protection, the Wall Street Journal reports.

• MGF Sourcing will ship already-ordered inventory under the settlement, which Aeropostale agreed to pay for within 14 days of delivery. MGF will also drop its objection to a new $160 loan from Crystal Financial LLC, and their 10-year agreement is severed, according to the Journal.

• Aeropostale previously said that MGF’s Draconian payment terms were a factor that led to its bankruptcy filing, a claim that the supplier said was "frivolous." The agreement, hailed by Judge Sean Lane at a May 23 hearing, is contingent upon Aeropostale sticking to its bankruptcy regimen, according to the report.

Dive Insight:

When Aeropostale sold a major stake to private equity firm Sycamore Partners in 2014, that included an agreement to source with Sycamore-owned MGF, a clothing manufacturer and supply chain management company.

The retailer filed for Chapter 11 bankruptcy last week, and announced store closing sales at 113 of its U.S. locations and 41 stores in Canada. 

While there may be some truth to Aeropostale’s contention that MGF’s and Sycamore’s terms led it to where it is today—in bankruptcy court and off the New York Stock Exchange—the reality is that the retailer hasn’t figured out how to appeal to teenagers more likely to spend their limited cash on going out to eat or other experiences.

Like its rivals in the teen apparel space—American Eagle Outfitters and Abercrombie & Fitch— Aeropostale found that its logo-centric clothing was overdone and out of favor post-recession. But while American Eagle has been able to depend on the strength of its jeans business, according to Columbia University business school retail studies professor Mark Cohen, and even Abercrombie has managed to hang on as it tries to figure out its post-Mark Jeffries approach, Aeropostale hasn’t found a way to sell apparel without massive, margin-killing discounting.

“Aéropostale has always been the weak link the chain,” Cohen told Retail Dive. “The ‘lower case a’ of the ‘three amigos.’ They never had a signature collection in terms of denim like Eagle, and they never had the presence within the consumer space like Abercrombie. It’s all about low price, and they can’t protect themselves from themselves. The lights start to dim and they go out and they don’t come back on. My guess is there’s no there there, and they’ll have terrible trouble coming out of Chapter 11 intact, just as I don’t think Sports Authority will come out intact.”