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TheStreet Open House

The Deal: Sycamore to Pursue Aeropostale Just Like Talbots

Stocks in this article: TLB ARO

Meanwhile, back at Aeropostale, the company ended the second quarter with cash and cash equivalents of $100.3 million and no debt. This lack of debt, coupled with disappointing earnings and a share price drop makes it an even likelier target for a firm like Sycamore that specializes in distressed retailers.

For example, there was the firm's March acquisition of Hot Topic Inc. for $600 million. And, when Kaluzny was at Golden Gate, he did a whole slew if distressed retail deals including Eddie Bauer.

And Aeropostale isn't likely to turn around on its own any time soon. In its third quarter guidance the company said it expected a loss in a range between $0.21 and $0.26 per diluted share, compared to earnings of $0.31 per diluted share for the third quarter of 2012. Aeropostale also made plans to double its projected store closings in 2013 to between 30 and40.

For fiscal 2014 ending Jan. 31, Aeropostale is projected to have revenue of nearly $2.2 billion and negative Ebitda of nearly $18 million, according to Bloomberg estimates. That compares to nearly $2.4 billion in revenue for fiscal 2013 and Ebitda of about $125 million.

The company did not immediately return calls seeking comment.

-- Written by Richard Collings in New York

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