Despite Aéropostale Inc.'s 7 percent jump in February same-store sales, Citigroup analyst Kimberly Greenberger downgraded shares of the retailer to sell from hold.
Greenberger cited concerns about growing inventory levels amid slowing consumer spending. She cut her price target to $24 from $28 a share. The stock price plummeted 9.07 percent Monday to close at $24.17 in New York Stock Exchange trading.
Although Aéropostale was one of the few teen retailers that posted positive results last month, Greenberger said she expected the company to report disappointing March sales. She cited tough comparisons against year-ago figures, an earlier Easter and earlier spring deliveries. March also is forecast to have wet and cold weather, which could further deter shopping.
"While we remain constructive on product execution and view Aéropostale's assortment favorably, we are convinced inventory is building, particularly in women's, as we are seeing price breaks in certain categories such as Bermuda shorts and baby-doll tops, which leads us to believe ownership in these categories is significantly above selling trends," Greenberger wrote in a research note.
Women's comps last month came in well below the men's gain of 20 percent, Greenberger said. Increasing inventory levels could erode first-quarter gross margins and earnings estimates.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
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