Back in January, I compared two teen retailers, Buckle (BKE) and Aeropostale (ARO). I advised betting on Buckle over Aeropostale. While BKE and ARO had similar sales and store growth, I reasoned that BKE was far more shareholder friendly than ARO. After all, 43% of BKE is held by insiders. Only 0.5% of ARO is owned by insiders. True to form, BKE took care of its shareholder. Since January, BKE has delivered $3.30 in dividends, including a $2.50 special dividend, equivalent to 10.7% of the share price at the time I recommended it. Giving out $152 million dollars in cash to shareholders is my definition of friendly when you consider that BKE is a $1.7 billion market cap company.
ARO, in contrast, gave no dividend. It just reported a quarter that disappointed investors. Over the year, ARO grew its equity position by $48 million. It's nice to see ARO grow its shareholder equity, although I'm not sure investors will ever see their share of that money.
Oh and may I add, even with the bountiful dividend, BKE beat ARO in share performance, proving once again it pays to buy companies that are investor friendly.
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Is BKE done? No way. Thursday, the company wowed with a 7.9% same store sales increase. The stock has plenty of room to rise. Remember this stock is heavily shorted.
P.S. Janney Montgomery Scott upgraded the stock from a sell yesterday (boy, were they wrong on their sell; I wonder whether they will get it right with a buy recommendation.)
Disclosure: Long BKE, no position ARO