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AEROPOSTALE INC (ARO)

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Aeropostale, Inc. : Aeropostale Reports Results For Third Quarter Of Fiscal 2012

11/28/2012 | 04:05pm US/Eastern
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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.

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