Dive Brief:
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Teen apparel retailer Aeropostale is preparing to file for bankruptcy as soon as this month, sources have told Bloomberg. The move would allow swift closure of underperforming stores in Aeropostale's 800 store repertoire.
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The company is seeking to reorganize and work on financing to fund operations under Chapter 11, but hopes to avoid that or find a buyer, sources told Bloomberg.
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Aeropostale also announced Friday that it wouldn’t fight a delisting notice from the New York Stock Exchange, which suspended trading of its stock effective immediately, and has begun trading on the OTCQX Best Market marketplace.
Dive Insight:
While rivals Abercrombie & Fitch and American Eagle Outfitters have reported rising sales among their turnaround efforts, Aeropostale hasn’t seen the same success in the tough teen apparel space. 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, especially in its target millennial demographic.
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 stock fell 28% on the news, adding to its 94% drop in the past 12 months.
Last month Aeropostale reported that 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 stores in the fourth quarter, while 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 company said last week that it would delay filing its annual report, Bloomberg reports.
