Aeropostale tries to bounce off a bottom


Shares of Aeropostale (ARO +3.9%) are in recovery mode on heavy volume after tumbling last week to multi-year lows.

The company is stuck in a rut of sales falling off faster than expenses.

Though most retail analysts see the ARO sell-off as a bit overdone, the company's sales and profit outlook hasn't changed yet.

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Comments (6)
  • Lumia_920
    , contributor
    Comments (102) | Send Message
     
    Overreaction. $150M in cash from private equity company is almost 30% of market capital. ARO will be back in low 9 by EOY.
    18 Mar 2014, 01:12 PM Reply Like
  • Jeremy Raper
    , contributor
    Comments (483) | Send Message
     
    the 150mm is debt, not equity - so it doesn't really help unless Sycamore exercises their right to buy 5% more of the equity (strike is $7.25, so looks unlikely for now).

     

    Honestly the more I look at this co the more I think its in a bit of a death spiral.
    18 Mar 2014, 03:52 PM Reply Like
  • vikrams22
    , contributor
    Comments (7) | Send Message
     
    Agreed. Plus with activist investors like Sycamore, Crescendo, Hirzel etc. in the game, there is high likelihood that of the company to be sold / taken private. Sycamore's cash injection deal with ARO is a proof that activist investors see hidden value. ARO management needs to be booted for their underperformance and putting in the poison pill in Nov '13.
    18 Mar 2014, 05:26 PM Reply Like
  • stratmam
    , contributor
    Comments (2) | Send Message
     
    I am holding and planning to add more shares. They have been successful in the past and I think they can be again. They need new products that appeals to teens and should be able to make that happen. Seasonal employment opportunities are coming for teens and they will have more money to spend. I think share price will be higher by the 4th QT.
    18 Mar 2014, 05:26 PM Reply Like
  • Coffee with Milk
    , contributor
    Comments (5) | Send Message
     
    I am baffled by the timing of: (a) management missing earnings by a mile last quarter and (b) Sycamore gaining active control along with their $150M credit. Seems like shareholders were left in the dark to some degree. If this was indeed a surprise to all, how will Sycamore handle the shock of such a rapid loss of cash? Will another investor be invited to provide liquidity or will Sycamore take its second pound of [ARO] flesh with even more aggressive terms?
    18 Mar 2014, 07:31 PM Reply Like
  • Equitable Research
    , contributor
    Comments (2200) | Send Message
     
    More importantly… who wears Aeropostale clothes these days? I think they are the epitome of "uncool".
    18 Mar 2014, 07:45 PM Reply Like
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