March 08, 2012 at 16:05 PM EST
Aeropostale Reports Results for Fourth Quarter and Fiscal 2011
Fourth Quarter Earnings of $0.32 Per Diluted Share

NEW YORK, March 8, 2012 /PRNewswire/ -- Aeropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of casual apparel for young women and men, today reported results for the fourth quarter and fiscal 2011, and provided guidance for the first quarter of fiscal 2012.

Thomas P. Johnson, Chief Executive Officer, commented, "I am very proud of the speed, diligence and tenacity of our entire team in addressing our business challenges.  We worked swiftly and strategically throughout the year to infuse newness into our merchandise assortment and evolve the projection of our fashion message.  While our overall financial performance for the year was disappointing, we believe 2011 was a pivotal inflection point for our organization."

Fourth Quarter Performance

For the fourth quarter of fiscal 2011, net sales decreased 4% to $808.4 million, from $839.3 million in the year ago period. Same store sales for the fourth quarter decreased 9%, compared to a same store sales decrease of 3% last year.

Net income for the fourth quarter of fiscal 2011 was $26.1 million, or $0.32 per diluted share, which included an after-tax charge of $9.5 million, or $0.12 per diluted share, resulting from store asset impairment charges.  The Company reported net income of $83.8 million, or $0.95 per diluted share for the fourth quarter last year.

Excluding the store asset impairment charges, the Company reported adjusted net income of $35.6 million, and adjusted earnings of $0.44 per diluted share (see Exhibit D).  This compares to the Company's previously issued guidance of $0.35 to $0.38 per diluted share, which did not include the aforementioned charges.  

Full Fiscal Year Performance

Net sales for fiscal 2011 decreased 2% to $2.342 billion, from $2.400 billion in the year ago period. Same store sales for fiscal 2011 decreased 9%, compared to a same store sales increase of 1% last year.

Net income for fiscal 2011 was $69.5 million, or $0.85 per diluted share. Results for fiscal 2011 included the following items:

  • Store asset impairment charges of $9.1 million after tax, or $0.11 per diluted share (as calculated by the Company's annual effective tax rate), recorded during the fourth quarter of fiscal 2011, partially offset by
  • A benefit of $5.3 million after tax, or $0.06 per diluted share, from the previously disclosed resolution of a dispute with one of the Company's merchandise vendors, surrounding prior period allowances in the second quarter of fiscal 2011.

Excluding these items, adjusted net income for fiscal 2011 was $73.3 million, and adjusted earnings was $0.90 per diluted share.

The Company reported net income of $231.3 million, or $2.49 per diluted share in the same period last year, which included an after tax charge of $3.8 million, or $0.04 per diluted share, resulting from a retirement plan charge.

E-commerce

Net revenues from the Company's e-commerce business for the fourth quarter of fiscal 2011 increased 8% to $83.2 million, from $77.3 million in the year ago period.  Net revenues from the Company's e-commerce business for fiscal 2011 increased 14% to $182.1 million, from $160.2 million in the year ago period.

Share Repurchase Program

The Company repurchased 4.2 million shares of common stock for $100.1 million during fiscal 2011. As of January 28, 2012 the Company had $145.2 million of remaining buyback availability under the $1.15 billion share repurchase program.  

First Quarter Guidance

For the first quarter of fiscal 2012, the Company expects earnings in the range of $0.08 to $0.10 per diluted share, compared to earnings of $0.20 per diluted share last year.

Mr. Johnson, continued, "Looking to 2012, Aeropostale is committed to repositioning our brand for future success.  We will continue to evolve our merchandise, capture the attention of our customer through innovative marketing, invest in our infrastructure to maximize efficiencies, and support our future growth vehicles."

Store Growth and Capital Spending for Fiscal 2012

For fiscal 2012 the Company plans to open approximately 18 Aeropostale stores, approximately 30 P.S. from Aeropostale stores, remodel approximately 5 stores, and close approximately 10 Aeropostale stores.  The Company expects to invest approximately $66.0 million for its store growth plans, as well as certain information technology investments.  This compares to capital expenditures of approximately $73.3 million in fiscal 2011.

Conference Call Information

The Company will be holding a conference call today at 4:15 P.M. ET to review its fourth quarter results. The broadcast will be available through the 'Investor Relations' link at www.aeropostale.com and www.fulldisclosure.com.  To listen to the broadcast your computer must have Windows Media Player installed. If you do not have Windows Media Player go to the latter site prior to the call, where you can download the software for free.

Use of Non-GAAP Measures

The Company believes that the disclosure of adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures, provides investors with useful information to help them better understand the Company's results (see Exhibit D).  

About Aeropostale, Inc.

Aeropostale, Inc. is a mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aeropostale® stores and 4 to 12 year-old kids through its P.S. from Aeropostale™ stores. The Company provides customers with a focused selection of high-quality, active-oriented, fashion and fashion basic merchandise at compelling values. Aeropostale® maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. Aeropostale® products can only be purchased in its Aeropostale stores and online at www.aeropostale.com. P.S. from Aeropostale™ products can be purchased in P.S. from Aeropostale™ stores and online at www.ps4u.com. The Company currently operates 915 Aeropostale stores in 50 states and Puerto Rico, 68 Aeropostale stores in Canada and 71 P.S. from Aeropostale stores in 20 states.

SPECIAL NOTE: THIS PRESS RELEASE AND ORAL STATEMENTS MADE FROM TIME TO TIME BY REPRESENTATIVES OF THE COMPANY CONTAIN CERTAIN "FORWARD-LOOKING STATEMENTS" CONCERNING EXPECTATIONS FOR SALES, STORE OPENINGS, GROSS MARGINS, EXPENSES, STRATEGIC DIRECTION AND EARNINGS.  ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER INCLUDE, CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF NEW PRODUCTS OR PRICING CHANGES BY OUR COMPETITORS, CHANGES IN THE ECONOMY AND OTHER EVENTS LEADING TO A REDUCTION IN DISCRETIONARY CONSUMER SPENDING; SEASONALITY; RISKS ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER CONDITIONS AND THE POSSIBLE ADVERSE IMPACT OF CHANGES IN IMPORT RESTRICTIONS; RISKS ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT ITS GROWTH STRATEGIES, AS WELL AS THE OTHER RISK FACTORS SET FORTH IN THE COMPANY'S FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS.  READERS ARE REFERRED TO THOSE SEC FILINGS.

EXHIBIT A



AEROPOSTALE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)

(Unaudited)



January 28,

2012

January 29,

2011




ASSETS



Current Assets:



 Cash and cash equivalents                                             

$ 223,712

$265,553

 Merchandise inventory

163,522

156,596

 Other current assets                                                   

53,538

47,416

    Total current assets                                                  

440,772

469,565




Fixtures, equipment and improvements, net                                  

287,393

299,242




Other assets                                                          

4,971

4,390




TOTAL ASSETS                                                       

$733,136

$773,197




LIABILITIES AND STOCKHOLDERS' EQUITY



Current Liabilities:



 Accounts payable                                                     

$  103,476

$  103,014

 Accrued expenses                                                    

88,543

113,088

    Total current liabilities                                                 

192,019

216,102




Other non-current liabilities                                               

131,683

124,458




Stockholders' equity                                                     

409,434

432,637




TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            

$733,136

$773,197




EXHIBIT B


AEROPOSTALE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

SELECTED STORE DATA


(in thousands, except per share and store data)

(Unaudited)



13 weeks ended


January 28, 2012

January 29, 2011



% of sales


% of sales






Net sales

$808,380

100.0%

$839,331

100.0%






Cost of sales (including certain buying, occupancy and

warehousing expenses) (1)

612,250

75.7

541,205

64.5






Gross profit

196,130

24.3

298,126

35.5






Selling, general and administrative expenses

155,305

19.2

154,253

18.4






Income from operations

40,825

5.1

143,873

17.1






Interest expense

117

0.0

68

0.0






Income before income taxes

40,708

5.1

143,805

17.1






Income taxes

14,609

1.9

59,985

7.1






Net income

$26,099

3.2%

$83,820

10.0%






Basic earnings per share

$0.32


$0.96







Diluted earnings per share

$0.32


$0.95







Weighted average basic shares

80,757


87,461







Weighted average diluted shares

81,472


88,601







STORE DATA:










Comparable store sales decrease

(9)%


(3)%







Stores open at end of period

1,057


1,012







Total square footage at end of period

3,908,784


3,703,033







Average square footage during period

3,909,830


3,711,795



(1)  Cost of sales for the fourth quarter of fiscal 2011 was unfavorably impacted by store asset impairment charges of $14.8 million ($9.5 million after tax, or $0.12 per diluted share), or by 1.8% of net sales.  Store asset impairment charges of $0.7 million were recorded during the fourth quarter of fiscal 2010.  




EXHIBIT C


AEROPOSTALE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

SELECTED STORE DATA


(in thousands, except per share and store data)

(Unaudited)



52 weeks ended


January 28, 2012

January 29, 2011



% of sales


% of sales






Net sales

$2,342,260

100.0%

$2,400,434

100.0%






Cost of sales (including certain buying, occupancy and warehousing expenses) (1)

1,733,916

74.0

1,514,272

63.1






Gross profit

608,344

26.0

886,162

36.9






Selling, general and administrative expenses (2)

494,829

21.1

499,368

20.8






Income from operations

113,515

4.9

386,794

16.1






Interest expense

417

0.0

118

0.0






Income before income taxes

113,098

4.9

386,676

16.1






Income taxes

43,583

1.9

155,337

6.5






Net income

$69,515

3.0%

$231,339

9.6%






Basic earnings per share

$0.86


$2.52







Diluted earnings per share

$0.85


$2.49







Weighted average basic shares

81,208


91,700







Weighted average diluted shares

81,811


92,762







STORE DATA:










Comparable store sales (decrease) increase

(9)%


1%







Average square footage during period

3,832,477


3,568,442



(1) Cost of net sales for fiscal 2011 was unfavorably impacted by store asset impairment charges recorded in the fourth quarter of fiscal 2011 of $14.8 million ($9.1 million after tax, or $0.11 per diluted share), or by 0.6% of net sales. This amount was partially offset by a favorable benefit of $8.7 million ($5.3 million after tax, or $0.06 per diluted share), or by 0.4% of net sales, resulting from the resolution of a previously disclosed dispute with one of the Company's merchandise vendors, surrounding prior period allowances that was recorded during the second quarter of fiscal 2011. Additional store asset impairment charges of $1.2 million were recorded during the third quarter of fiscal 2011 and $0.7 million were recorded during the fourth quarter of fiscal 2010.  


(2) Selling, general and administrative expenses for fiscal 2010 were unfavorably impacted by a charge of $6.4 million ($3.8 million after tax, or $0.04 per diluted share), or by 0.3% of net sales, resulting from a previously disclosed retirement plan payment that was recorded during the third quarter of fiscal 2010.




EXHIBIT D



AEROPOSTALE, INC.

RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE

(in thousands, except per share data)

(Unaudited)


The following table presents a reconciliation of net income and diluted earnings per share ("EPS") on a GAAP basis to the non-GAAP adjusted basis discussed in this release.  



13 weeks ended


January 28, 2012

January 29, 2011


Net Income

Diluted EPS

Net Income

Diluted EPS






As reported

$26,099

$0.32

$83,820

$0.95






Asset impairment charges recorded during the fourth

quarter of fiscal 2011 * (1)

9,477

0.12






As adjusted

$35,576

$0.44

$83,820

$0.95






52 weeks ended


January 28, 2012

January 29, 2011


Net Income

Diluted EPS

Net Income

Diluted EPS






As reported

$69,515

$0.85

$231,339

$2.49






Asset impairment charges recorded during the fourth

quarter of fiscal 2011 * (1)

9,082

0.11






Vendor dispute resolution*

(5,345)

(0.06)






Retirement plan charge *

$3,757

$0.04






As adjusted

$73,252

$0.90

$235,096

$2.53


*See the above press release for a further description.


(1) - Additionally, the Company recorded after-tax store asset impairment charges of $0.8 million during the third quarter of fiscal 2011 and $0.4 million during the fourth quarter of fiscal 2010, which are not reflected in the above table.



Company Contact:
Kenneth Ohashi/VP, Investor & Media Relations
(646) 452-1876 or kohashi@aeropostale.com

Media Contact:
Leigh Parrish, FTI Consulting
(212) 850-5600

SOURCE Aeropostale, Inc.

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