What to Expect When Aeropostale (ARO) Reports Earnings This Afternoon
NEW YORK (TheStreet) -- Shares of Aeropostale (ARO) are down 6.55% to $3.71 in midday trading Thursday, ahead of the teen apparel retailer's fourth quarter 2014 earnings report, scheduled to be released after the market closes.
Analysts are expecting the struggling company to post a loss of 3 cents per share, better than the loss of 35 cents from the year ago quarter. Revenue is expected by analysts to come in at $576.78 million for the period, representing a 14% decline in sales year over year.
Early last month, Aeropostale announced its preliminary fiscal fourth quarter guidance along with the appointment of Marc Miller as new COO of the company, and David Dick as the CFO.
The company expects to report a loss of between 1 cent to 6 cents per share on revenue of $594.5 million for the quarter.
The clothing retailer has taken a hit due to dropping mall traffic, posting eight straight quarters of losses, with analysts continuing to see losses through 2015 and beyond.
Retail analyst Jeff Toohig of ITG Investment Research says he sees a trend towards commodification in Aeropostale's offerings, similar to that of peer Abercrombie & Fitch (ANF) - Get Report.
"I do anticipate a negative trend, at least for the next four to eight quarters. There's just a lack of differentiation in its products, and we're seeing promotions and heavy discounting," said Toohig.
On the other hand, he sees an improving trend in rival retailer American Eagle Outfitters (AEO) - Get Report, which Toohig thinks has a stronger brand presence.
Investors will also be keeping an eye on inventory position heading into spring.
New York City-based Aeropostale is a mall retailer of casual apparel and accessories for teenagers and younger kids. The company operates 949 Aeropostale stores in the U.S. and Canada.
Separately, TheStreet Ratings team rates AEROPOSTALE INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AEROPOSTALE INC (ARO) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow." You can view the full analysis from the report here: ARO Ratings Report