Teen-focused apparel chain Aeropostale Inc. (ARO), reported a swing to loss in the first quarter, hurt mainly by a nine percent drop in sales and lower gross margins. The retailer also detailed its second-quarter guidance, which is significantly below Wall Street's current projections.
New York-based Aeropostale posted a first-quarter loss of $12.2 million or $0.16 per share, compared to a profit of $10.6 million or $0.13 per share last year. On average, twenty-six analysts polled by Thomson Reuters expected a loss of $0.17 per share for the quarter. Analysts' estimates typically exclude one-time items.
Aeropostale's net sales for the first quarter slid nine percent to $452.3 million from $497.2 million a year ago. Twenty-four analysts had a consensus revenue estimate of $444.26 million for the quarter.
Comparable sales, or sales from stores open at least a year, fell 14 percent, compared to the prior year.
Gross margin, or percentage of sales left after deducting cost of sales, narrowed to 22.4 percent from 28.0 percent last year.
Chief Executive Thomas Johnson blamed the increase in promotional activity to clear off fourth-quarter inventory as a reason for lower margins. He also added that weak macroeconomic environment and an unseasonably cool weather impacted Aeropostale's bottom line.
Looking to the second quarter, Aeropostale expects to post a loss of $0.20 to $0.15 per share. Analysts currently expects the company to post a loss of $0.06 per share for the quarter.
Commenting on the outlook, Johnson said, "Our second quarter guidance reflects limited visibility as we head into the initial back-to-school selling period, as well as the uncertainty regarding the overall macroeconomic environment."
ARO closed Thursday's trading at $16.48, down $0.17 or 1.02%, on the NYSE. The stock further slipped $0.63 or 3.82% in after-hours.
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