Aéropostale, Inc., a Delaware corporation, originally incorporated as MSS-Delaware, Inc. on September 1, 1995 and later changed to Aéropostale, Inc. on February 1, 2000, is a mall-based specialty retailer of casual apparel and accessories. We design, market and sell our own brand of merchandise principally targeting 14 to 17 year-old young women and young men. We also sell Aéropostale merchandise through our e-commerce website, www.aeropostale.com. As of January 31, 2009, we operated 914 stores, consisting of 874 Aéropostale stores in 48 states and Puerto Rico, 29 Aéropostale stores in Canada, and 11 Jimmy’Z stores in 10 states. We plan to close all of the Jimmy’Z stores by the end of the second quarter of fiscal 2009 (see Note 3 to the Notes to Consolidated Financial Statements for a further discussion).
Our Aéropostale concept provides the customer with a focused selection of high-quality, active-oriented, fashion and fashion basic merchandise at compelling values. We maintain control of our proprietary brands by designing and sourcing all of our merchandise. Our Aéropostale products are sold only at our stores and online through our e-commerce website, www.aeropostale.com. We strive to create a fun, high-energy shopping experience through the use of creative visual merchandising, colorful in-store signage, popular music and an enthusiastic well-trained sales force. Our average Aéropostale store is generally smaller than that of our mall-based competitors. We believe this enables us to achieve higher sales productivity and project a sense of greater action and excitement in the store.
The Aéropostale brand was established by R.H. Macy & Co., Inc., as a department store private label initiative, in the early 1980’s targeting men in their twenties. Macy’s subsequently opened the first mall-based Aéropostale specialty store in 1987. Over the next decade, Macy’s, and then Federated Department Stores, Inc. (now Macy’s, Inc.), expanded Aéropostale to over 100 stores. In August 1998, Federated sold its specialty store division to our management team and Bear Stearns Merchant Banking. In May of 2002, Aéropostale management took us public through an initial public offering and listed our common stock on the New York Stock Exchange.
Our fiscal year ends on the Saturday nearest to January 31. Fiscal 2008 was the 52-week period ended January 31, 2009, fiscal 2007 was the 52-week period ended February 2, 2008 and fiscal 2006 was the 53-week period ended February 3, 2007. Fiscal 2009 will be the 52-week period ending January 30, 2010.
Continue to open new Aéropostale stores. We consider our merchandise in our stores as having broad appeal that continues to provide us with new store expansion opportunities. Over the last three fiscal years we opened 251 new Aéropostale stores. We plan to continue our growth by opening a total of approximately 40 new Aéropostale stores during fiscal 2009, which will include approximately 15 new Aéropostale stores in Canada. We plan to open stores both in markets where we currently operate stores, and in new markets. (see the section “Stores — Store design and environment” below).
New Concept. We have developed a new retail store concept called “P.S. from Aéropostale”. Our new concept will offer casual clothing and accessories focusing on elementary school children between the ages of 7 and 12. Our new brand will draw from the core competencies of Aéropostale, offering the customer trend-right merchandise at compelling values. The innovative store format will strive to be a fun, playful and inviting shopping experience for both the parent and child. The first P.S. from Aéropostale store is planned to open during the second quarter of fiscal 2009. In addition, we will be launching an e-commerce website at www.ps4u.com shortly thereafter. We plan to open approximately 10 P.S. from Aéropostale stores during fiscal 2009.
Enhance our brand and increase our store productivity. We seek to capitalize on the success of our core Aéropostale brand, while continuing to enhance our brand recognition through in-store as well as external marketing initiatives.
We seek to generate comparable store sales growth by increasing net sales per average square foot, increasing average unit retail and increasing transactions. We expect to continue employing our promotional pricing strategies, while also identifying and capitalizing upon developing trends in the market.
E-Commerce. We launched our Aéropostale e-commerce business in May 2005. The Aéropostale web store is accessible at our website, www.aeropostale.com. A third party provides fulfillment services for our e-commerce business, including warehousing our inventory and fulfilling our customers’ sales orders. We purchase, manage and own the inventory sold through our website and we recognize revenue from the sale of these products when the customer receives the merchandise.
International Licensing. During 2008, we signed our first international licensing agreement. Under that agreement, as licensor we will receive guaranteed minimum annual royalty payments from the licensee throughout the term of the agreement, as well as certain support and administrative fees. The licensee expects to open a minimum of three Aéropostale retail stores in the Dubai region during fiscal 2009, and additional stores during the term of the license agreement. We assume no inventory risk on the Aéropostale merchandise sold in licensee’s stores and we do not own or lease the underlying real estate where the stores operate. In addition, our international licensing agreement contains other customary terms and conditions governing our business relationship with the licensee. We will continue to evaluate other international licensing opportunities on a periodic basis.
Existing stores. We locate our stores primarily in shopping malls, outlet centers and, to a much lesser degree, lifestyle and off-mall shopping centers, all located in geographic areas with the highest possible concentrations of our target customers. We generally locate our stores in mall locations near popular teen gathering spots, such as food courts and other teen-oriented retailers. As of January 31, 2009, we operated 903 stores in the following 48 U.S. states, Puerto Rico and four Canadian provinces. Additionally, as of January 31, 2009, we operated 11 Jimmy’Z stores in 10 states.
We believe that a key component of our success is our ability to understand what our customers want and what they can afford. Our merchandise, which we believe is of comparable quality to that of our primary competitors, is generally priced lower than our competitors’ merchandise. We conduct promotions in our stores throughout the year generally lasting anywhere from two to four weeks in length.
As of January 31, 2009, we employed 3,639 full-time and 11,050 part-time employees. We employed 621 of our employees at our corporate offices and in the field, and 14,068 at our store locations. The number of part-time employees fluctuates depending on our seasonal needs. None of our employees are represented by a labor union and we consider our relationship with our employees to be good.