NEW YORK ( TheStreet) -- Aeropostale ( ARO) is taking precautions to defend itself over a possible takeover by private equity, according to reports. The New York Postreported that the teen apparel retailer hired Barclays Capital as a strategic advisor and that management wants to remain publicly traded. The move comes after two high-profile specialty retail acquisitions by private equity -- J.Crew ( JCG) and Gymboree. The reports are sending shares of Aeropostale climbing 6.4% to $25.10 in morning trading, Aeropostale has faced some difficulties in the second half of the year, reporting a 1% decline in same-store sales in November, its second consecutive monthly drop. Indeed, Aeropostale is showing many of the classic signs of a buyout target, said Wall Street Strategies analyst Brian Sozzi. "Am I surprised? No. There are poor
merchandise assortments coming up until spring, Meads was just pushed out, the stock is under pressure and management believes it's undervalued." Aeropostale also holds significant growth potential with its newest children's concept P.S.. Last week the stock also saw an increase in options activity. "The reason to stay public reflects management's belief the company could command a greater valuation over the long-term, rather than accepting an opportunistic bid by a PE house," Sozzi wrote.
Private-equity interest has been heating up in the sector after M&A types distanced themselves from retailer after the peak of the boom of 2007, Sozzi wrote in a note. Amid the recession, retailers slashed operating expenses, and altered business models, now making them more attractive acquisition targets. Now, as consumer spending returns modestly, it enhances the long-term free cash flow profile of many companies in the sector, Sozzi continues. Indeed, it seems the focus of private equity is shifting from overplayed hands like Abercrombie & Fitch ( ANF) and American Eagle Outfitters ( AEO). -- Reported by Jeanine Poggi in New York. Follow TheStreet.com on Twitter and become a fan on Facebook.