Aéropostale to Shut Kids Stores in Cost-Cutting Move

In Industry News, Reports, What's New by Jeff PrineLeave a Comment

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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