Earnings Preview: Aeropostale

by: theflyonthewall.com December 02, 2008 | about stocks: ARO    

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Aeropostale (ARO) is expected to report Q3 earnings after market close Wednesday, December 3, with a conference call scheduled for 4:15 pm ET.

Guidance

Analysts are looking for a profit of 62c on revenue of $483.42M. The consensus range is 59c - 63c for EPS, and revenue of $479.83M - $494.28M, according to First Call. On November 6, the company reported that October same-store sales increased 1% on sales of $127.4M. For Q3, the company said total net sales were $482M and SSS increased 7%.

Analyst Views

In a November 12 note to clients, Brean Murray's Eric Beder downgraded the stock to Hold from Sell, explaining that while the company is winning the battle for the teen shopper, the "overall war" is hurting margins and dragging down upside. Between incremental costs from its new kids chain roll out, in addition to tougher comparisons, Beder says expectations remain too high. The company says that as consumers cut back on spending, Aeropostale's focus on value and promotions has been a good match with the current economy. Buckingham's David Glick remains concerned about increasingly difficult SSS and margin comparisons "against a backdrop of a decelerating economic environment". RBC Capital says Aeropostale was one of the winners this holiday season after checks indicated stores were crowded over the Black Friday weekend; however, the firm does not believe the retailer is immune from the consumer spending slowdown.

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