Aeropostale -12.3% AH on FQ4 miss, guidance, $150M financing deal

|By:, SA News Editor

Aeropostale (ARO) is guiding for FQ1 EPS of -$0.70 to -$0.75, well below a -$0.17 consensus. The forecast doesn't account for expected consulting fees or "potential accelerated store closures."

The apparel retailer has obtained $150M worth of credit facilities - a 5-year, $100M term loan facility, and a 10-year, $50M term loan facility - from P-E firm Sycamore Partners.

The deal includes an apparel sourcing arrangement with Sycamore-affiliated MGF Sourcing, and also gives Sycamore preferred stock good for buying 5% Aeropostale's common stock at a price of $7.25. If converted, the shares would raise Sycamore's stake to 12.3%.

Aeropostale was previously reported to be weighing investment and sale options. The company ended FQ4 with $106.5M in cash/equivalents, and no debt.

Aeropostale now plans to close 52 stores in FY14 (ends Jan. '15), while opening 7 and remodeling 10. The FY14 capex budget has been lowered to $22M from $35M; FY13 capex was $84M.

Comparable sales (inc. e-commerce) fell 15% Y/Y in FQ4, the same as FQ3. Gross margin fell 680 bps Y/Y to 13%.

FQ4 results, PR