The plans, which will include cutting 100 corporate jobs by the end of January, will save about $35 million to $40 million a year in fiscal 2016.
Aeropostale expects a loss of 4 cents to 17 cents per share for the fiscal 2015 fourth quarter that ends this month.
"The decisions that led to today's actions are a result of our focus on Aeropostale's future, and our goal of returning to profitability," CEO Julian Geiger said in a statement. "The reiteration of our fourth quarter guidance demonstrates sequential improvement from a sales and operating loss perspective."
Additionally, Geiger will give up 1 million stock options for "the purpose of motivating and retaining other key members of the organization," according to the company.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate AEROPOSTALE INC as a Sell with a ratings score of D-. This is driven by multiple weaknesses, 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 weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has declined marginally to -$38.23 million or 6.10% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The gross profit margin for AEROPOSTALE INC is rather low; currently it is at 23.04%. Regardless of ARO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ARO's net profit margin of -7.25% significantly underperformed when compared to the industry average.
- ARO's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 88.50%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- ARO, with its decline in revenue, underperformed when compared the industry average of 4.5%. Since the same quarter one year prior, revenues fell by 19.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- AEROPOSTALE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AEROPOSTALE INC reported poor results of -$2.62 versus -$1.82 in the prior year. This year, the market expects an improvement in earnings (-$1.54 versus -$2.62).
- You can view the full analysis from the report here: ARO