Earnings Preview: Aeropostale

Aeropostale (ARO) is expected to report Q3 earnings after market close Wednesday, December 3, with a conference call scheduled for 4:15 pm ET.

Guidance

Analysts are looking for a profit of 62c on revenue of $483.42M. The consensus range is 59c to 63c for EPS, and revenue of $479.83M to $494.28M, according to First Call. On November 6, the company reported October same-store sales increased 1% on sales of $127.4M. For Q3, the company said total net sales were $482M and SSS increased 7%.

Analyst Views

In a November 12 note to clients, Brean Murray's Eric Beder downgraded the stock to Hold from Sell, explaining that while the company is winning the battle for the teen shopper, the "overall war" is hurting margins and dragging down upside. Between incremental costs from its new kids' chain rollout and tougher comparisons, Beder says expectations remain too high. At the same time, the company says that as consumers are cutting back on spending, Aeropostale's focus on value and promotions has been a good match with the current economy.

Barclays analyst Jeff Black said that Aeropostale is currently at an "inflection point" with operating margins set to decline and comps on the verge of turning negative. Buckingham's David J. Glick says he remains concerned about increasingly difficult SSS and margin comparisons "against a backdrop of a decelerating economic environment".