ARO LIQUIDATION INC 
By NEW YORK, Nov. 28, 2012 /PRNewswire/ -- Aeropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of casual apparel for young women and men, today reported results for the third quarter of fiscal 2012, and provided guidance for the fourth quarter of fiscal 2012.
Third Quarter Performance
Diluted net earnings for the third quarter of 2012 were $0.31 per share, compared to $0.30 per diluted share in the same period last year. Net income for the third quarter of 2012 was $24.9 million, compared to net income of $24.1 million last year.
For the third quarter of fiscal 2012, net sales increased 2% to $605.9 million, from $596.5 million in the year ago period. Comparable sales, including the e-commerce channel, for the third quarter decreased 1% compared to a 7% decrease last year. Comparable store sales, excluding the e-commerce channel, for the third quarter decreased 2%, compared to a 9% decrease last year.
Thomas P. Johnson, Chief Executive Officer, commented, "For the third quarter, we achieved net earnings slightly ahead of our previously issued guidance. Although we experienced pressure on our women's core basics business, she responded positively to our fashion offering. In addition, our men's and accessories businesses performed well."
E-commerce
Net revenue from the Company's e-commerce business for the third quarter of fiscal 2012 increased 12% to $51.1 million, from $45.7 million in the year ago period.
Cash Position and Share Repurchase Program
The Company ended the quarter with cash and cash equivalents of $184.5 million and no debt. During the third quarter of fiscal 2012, the Company repurchased approximately $40.8 million, or 3.0 million shares of common stock. The Company currently has $104.4 million of availability remaining under its share repurchase program.
Store Growth and Capital Spending
The Company opened five Aeropostale and five P.S. from Aeropostale stores, and closed two Aeropostale and two temporary P.S. from Aeropostale stores during the quarter. For the third quarter, the Company invested $15.9 million in planned capital expenditures.
Fourth Quarter Guidance
The Company announced earnings guidance for the fourth quarter of fiscal 2012. The Company expects adjusted earnings in the range of $0.36 to $0.41 per diluted share, compared to adjusted earnings of $0.44 per diluted share in the same period last year. This earnings guidance does not include the impact of any potential store asset impairment charges, and assumes an effective tax rate of approximately 43.5% versus a tax rate of 35.9% last year.
Mr. Johnson continued, "While our performance over the Black Friday weekend was encouraging, the environment during the first few weeks of November was challenging. As a result, we continue to be cautious for the remainder of the quarter given the inconsistency we are seeing in our business against the backdrop of a highly promotional environment. We will continue to focus on delivering on our strategic initiatives, managing our business conservatively, and ending the quarter with inventories well-controlled."
Use of Non-GAAP Measures
The Company believes that the disclosure of adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures, provides investors with useful information to help them better understand the Company's results (see Exhibit D).
Conference Call Information
The Company will be holding a conference call today at 4:15 P.M EST to review its third quarter results. The broadcast will be available through the 'Investor Relations' link at www.aeropostale.com and www.fulldisclosure.com. To listen to the broadcast your computer must have Windows Media Player installed. If you do not have Windows Media Player go to the latter site prior to the call, where you can download the software for free.
About Aeropostale, Inc.
Aeropostale®, Inc. is a primarily mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aeropostale® stores and 4 to 12 year-old kids through its P.S. from Aeropostale® stores. The Company provides customers with a focused selection of high quality fashion and fashion basics at compelling values in an innovative and exciting store environment. Aeropostale® maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. Aeropostale® products can only be purchased in Aeropostale® stores and online at www.aeropostale.com. P.S. from Aeropostale® products can be purchased in P.S. from Aeropostale® stores and online at www.ps4u.com and www.aeropostale.com. The Company currently operates 916 Aeropostale® stores in 50 states and Puerto Rico, 78 Aeropostale stores in Canada and 99 P.S. from Aeropostale® stores in 20 states. In addition, pursuant to various licensing agreements, our licensees currently operate 28 Aeropostale® and P.S. from Aeropostale® stores in the Middle East, Asia and Europe. On November 13, 2012, Aeropostale, Inc. acquired substantially all of the assets of online women's fashion footwear and apparel retailer GoJane.com, Inc. Based in Ontario, California, GoJane focuses primarily on fashion footwear, with a select offering of contemporary apparel and other accessories.
SPECIAL NOTE: THIS PRESS RELEASE AND ORAL STATEMENTS MADE FROM TIME TO TIME BY REPRESENTATIVES OF THE COMPANY CONTAIN CERTAIN "FORWARD-LOOKING STATEMENTS" CONCERNING EXPECTATIONS FOR SALES, STORE OPENINGS, GROSS MARGINS, EXPENSES, STRATEGIC DIRECTION AND EARNINGS. ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER INCLUDE, CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF NEW PRODUCTS OR PRICING CHANGES BY OUR COMPETITORS, CHANGES IN THE ECONOMY AND OTHER EVENTS LEADING TO A REDUCTION IN DISCRETIONARY CONSUMER SPENDING; SEASONALITY; RISKS ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER CONDITIONS AND THE POSSIBLE ADVERSE IMPACT OF CHANGES IN IMPORT RESTRICTIONS; RISKS ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT ITS GROWTH STRATEGIES, AS WELL AS THE OTHER RISK FACTORS SET FORTH IN THE COMPANY'S FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS OR CIRCUMSTANCES.
EXHIBIT A
AEROPOSTALE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October 27, 2012 January 28, 2012 October 29, 2011
---------------- ---------------- ----------------
ASSETS
Current Assets:
Cash and cash equivalents $184,456 $223,712 $109,379
Merchandise inventory 277,440 163,522 265,133
Other current assets 64,578 54,565 67,500
------ ------ ------
Total current assets 526,474 441,799 442,012
Fixtures, equipment and improvements,
net 298,915 287,393 313,483
Other assets 4,057 6,041 5,830
----- ----- -----
TOTAL ASSETS $829,446 $735,233 $761,325
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $178,523 $103,476 $171,592
Accrued expenses 107,377 89,735 77,701
------- ------ ------
Total current liabilities 285,900 193,211 249,293
Other non-current liabilities 134,752 132,588 129,834
Stockholders' equity 408,794 409,434 382,198
------- ------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $829,446 $735,233 $761,325
EXHIBIT B
AEROPOSTALE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
SELECTED STORE DATA
(In thousands, except per share and store data)
(Unaudited)
13 weeks ended
--------------
October 27, 2012 October 29, 2011
---------------- ----------------
% of sales % of sales
---------- ----------
Net sales $605,918 100.0% $596,506 100.0%
Cost of sales (including
certain buying, occupancy and
warehousing expenses) 436,911 72.1% 434,985 72.9%
------- ---- ------- ----
Gross profit 169,007 27.9% 161,521 27.1%
Selling, general and
administrative expenses 126,514 20.9% 121,793 20.4%
------- ---- ------- ----
Income from operations 42,493 7.0% 39,728 6.7%
Interest expense, net 39 0.0% 185 0.0%
--- --- --- ---
Income before income taxes 42,454 7.0% 39,543 6.7%
Income taxes 17,507 2.9% 15,435 2.7%
------ --- ------ ---
Net income $24,947 4.1% $24,108 4.0%
Basic earnings per
share $0.31 $0.30
Diluted earnings
per share $0.31 $0.30
Weighted average basic shares 79,833 80,741
Weighted average diluted shares 80,136 81,068
STORE DATA:
Comparable sales change
(including e-commerce
channel) -1% -7%
Comparable store sales change
(excluding e-commerce
channel) -2% -9%
Stores open at end of period 1,091 1,055
Total square footage at end of
period 4,033,820 3,886,083
Average square footage during
period 4,027,337 3,862,152
EXHIBIT C
AEROPOSTALE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
SELECTED STORE DATA
(In thousands, except per share and store data)
(Unaudited)
39 weeks ended
--------------
October 27, 2012 October 29, 2011
---------------- ----------------
% of sales % of sales
---------- ----------
Net sales $1,588,469 100.0% $1,533,880 100.0%
Cost of sales (including
certain buying, occupancy and
warehousing expenses) 1,157,680 72.9% 1,121,666 73.1%
--------- ---- --------- ----
Gross profit 430,789 27.1% 412,214 26.9%
Selling, general and
administrative expenses 371,012 23.4% 339,524 22.1%
------- ---- ------- ----
Income from operations 59,777 3.7% 72,690 4.7%
Interest expense, net 346 0.0% 300 0.0%
--- --- --- ---
Income before income taxes 59,431 3.7% 72,390 4.7%
Income taxes 23,837 1.5% 28,974 1.9%
------ --- ------ ---
Net income $35,594 2.2% $43,416 2.8%
Basic earnings per
share $0.44 $0.53
Diluted earnings
per share $0.44 $0.53
Weighted average basic shares 80,714 81,358
Weighted average diluted shares 81,157 81,924
STORE DATA:
Comparable sales change
(including e-commerce
channel) 1% -8%
Comparable store sales change
(excluding e-commerce
channel) -1% -10%
Average square footage during
period 3,981,670 3,806,693
EXHIBIT D
AEROPOSTALE, INC.
RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE
(In thousands, except per share data)
(Unaudited)
The following table presents a reconciliation of net income and diluted earnings per share ("EPS") on a GAAP basis to the non-GAAP adjusted basis discussed in this release.
39 weeks ended
--------------
October 27, 2012 October 29, 2011
---------------- ----------------
Net Income Diluted EPS Net Income Diluted EPS
As reported $35,594 $0.44 $43,416 $0.53
Vendor dispute
resolution(1) - - (4,700) (0.06)
--- --- ------ -----
As adjusted $35,594 $0.44 $38,716 $0.47
(1)During the second quarter of 2011, we recorded a favorable pre-tax benefit of $8.7 million, resulting from the resolution of a previously disclosed dispute with one of
our sourcing agents. Of this benefit, $8.0 million related to periods prior to fiscal 2011.
Company Contact:
Kenneth Ohashi/VP, Investor & Media Relations
(646) 452-1876 or kohashi@aeropostale.com
Media Contact:
Leigh Parrish, FTI Consulting
(212) 850-5651
SOURCE Aeropostale, Inc.
