Despite Sales Rise, Aeropostale Q1 Profit Hit by Costs

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

New York—Despite a sales increase, Aeropostale’s first quarter earnings dropped 35% on weaker margins and higher costs.

For the quarter ended April 28, the teen-oriented specialty store reported Thursday that its net income slipped to $10.6 million, or 13 cents a share, compared to $16.4 million, 20 cents a share, last year.

Net sales increased 6% to $497.2 million. Comparable sales, including e-commerce, increased 2%, compared to a 5% decrease a year ago. Comparable store sales, excluding e-commerce, were essentially flat, compared to a 7% decrease last year.

Aeropostale’s earnings were in line with analysts’ average estimates, but sales were higher any analysts’ consensus for $487.14 million.

Gross margin narrowed to 28% from 29.1% as input costs increased 7.7%.

“During the first quarter, we continued to make progress on our key initiatives, and we experienced a significant improvement in trends versus the fourth quarter,” said Thomas Johnson, ceo.

Going forward, Aeropostale expects second quarter earnings between 3 to 5 cents a share. Analysts’ average expects 6 cents a share.

“While I am pleased with the sequential progress we are making in our business, the overall retail environment remains uncertain and we are early in the cycle of executing our key initiatives,” Johnson said.