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Aeropostale Tops Estimates

The retailer says the holiday is off to a strong start.
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posted a 10% profit rise in the third quarterm, narrowly topping expectations, as it entered the holiday season with some momentum.

For the third quarter, Aeropostale earned $36 million, or 48 cents a share, up from $32.6 million, or 41 cents, a year ago. That beat Wall Street expectations for 47 cents, according to Thomson Financial. The company's own projection called for earnings per share of 46 cents to 47 cents.

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Sales rose to $412.6 million from $385.5 million the year before. Analysts had expected sales of $416 million. Same-store sales, or sales at stores open at least a year, grew 1.9%

"We are very pleased with our results for the quarter, which exceeded expectations," said Chief Executive Julian Geiger. "During the quarter we were able to drive consistent comparable store sales increases, while continuing to improve our gross margins over last year. We also ended the quarter with well controlled inventories."

The company expects fourth-quarter earnings of 82 cents to 84 cents, including an 8-cent gain. Analysts predict earnings per share of 79 cents. For the year, Aeropostale expects earnings in the range of $1.60 to $1.62, in line with Wall Street estimates.

Aeropostale said holiday sales started off strong, with same-store sales climbing in the mid-single digit on the Friday and Saturday after Thanksgiving. The company drew in customers on Black Friday by offering a 50% discount on merchandise.

"The reaction to our holiday merchandise assortment has been positive and we remain focused on executing our strategies for the peak holiday selling season," Geiger said.

Shares of Aeropostale were down $1.01, or 3.6%, to $27 in after-hours trading.