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

  • 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
Comments (1)
  • Mike Andrewes
    , contributor
    Comments (75) | Send Message
     
    This is unfortunate. Will lose a few k on this. I should go down to the local mall and get an orange julius and a 4 dollar logo tee to feel better.
    13 Mar, 07:59 PM Reply Like
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