Aéropostale to Shut Kids Stores in Cost-Cutting Move

psNew York—After reporting its fifth consecutive quarterly loss and as Sycamore Partners takes a bigger share of it, Aéropostale Inc. said Wednesday it plans to shutter 125 doors of its P.S. stores and will eliminate about 100 jobs in a cost-cutting move.

The reductions “reflect the very difficult but necessary decisions we have made to align our business with overall retail market trends,” said CEO Thomas Johnson said.

The closings were in addition to plans to close 50 Aéropostale doors and two P.S. stores revealed in March.

The company said it expects pre-tax savings $30 million to $35 million annually from the moves and reiterated its first quarter outlook. Instead of kids’ clothing, the company will focus more on online sales, outlets and licensing.

Aéropostale is undergoing a comeback strategy after poor earnings and a loss of teen customers who have flocked to fast fashion retailers instead.

The pressure is on to make changes, too. In March, Sycamore Partners, the private equity firm, agreed to provide a $150 million loan. While another private equity firm Crescendo Partners has been pushing Aéropostale’s board to make bigger changes, perhaps even finding a buyer for the specialty chain.

For its first quarter, Aéropostale reaffirmed it expects a loss between $64 million to $68 million, or 70 to 75 cents a share (excluding the impact of the P.S. closings).

 

 

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com