By and  on December 1, 2010

Disappointing earnings and a weak fourth-quarter outlook translated into the end of Mindy Meads’ tenure as co-chief executive officer of Aéropostale Inc.

Meads is leaving the company Dec. 15. Thomas Johnson, who has served with her as co-ceo since the February retirement of Julian Geiger as ceo, has been named sole ceo of the teen retailer, which has seen its performance stumble in the second half of 2010.

Shares closed down 23 cents, or 0.9 percent, to $26.80 Wednesday but tumbled nearly 10 percent in after-hours trading following the announcement of Meads’ departure and Johnson’s promotion. The results followed a day in which the S&P Retail Index hit a new 52-week high and briefly topped the 500 mark for the first time since 2007.

Since joining the company in 2007 as president and chief merchandising officer, Meads has been the driving force of its value-oriented fashion direction and was given much of the credit for its pace-setting growth in the years since her arrival. Johnson, formerly chief operating officer, was similarly recognized for the chain’s disciplined, profitable approach to growth. Geiger, who has remained chairman, will expand his role of adviser to work closely with the management team primarily in the areas of merchandising and design.

Despite a strong Black Friday, the company said on its conference call that sales “decelerated significantly” for the remainder of Thanksgiving weekend, a trend that could be a harbinger for the chain and perhaps the teen space. Same-store sales, the firm said, were down 1 percent in November.

For the third quarter ended Oct. 30, profits fell 6.5 percent to $58.5 million, or 63 cents a diluted share, compared with year-ago income of $62.6 million, or 61 cents a share. Net sales rose 6.1 percent to $602.8 million from $567.8 million a year earlier. Analysts expected EPS of 66 cents on sales of $606 million. Gross margin sagged to 36.6 percent of sales from 39.3 percent a year ago.

Comparable-store sales were essentially flat, with a 2 percent decline in women’s, blamed on lackluster fashion, offset by a 6 percent rise in men’s. Long a top comp performer in the teen sector, it has reported comp declines in three of the last four months, with November’s 1 percent decline, a 2 percent drop in October and a 1 percent fall in August interrupted by a 3 percent gain in September.

With what it described as “extravagant promotions” at its rival mall-based chains, the firm projected fourth-quarter EPS of between 94 cents and 96 cents a diluted share, below Wall Street’s consensus for $1.03.

“Mindy played an important role with the design and merchandising teams in the evolution of and improvement in our merchandise assortment,” Johnson said. “I’m highly confident in the depth and breadth of our entire team to move our brands forward. In the current retail marketplace, we all know that the consumer is more demanding and discerning than ever.”

While Aéropostale moved to get past a difficult period in its history, retail stocks had a flashback to 2007 Wednesday as the S&P Retail Index gained 1.8 percent, or 8.63 points, to close at 499.08 after hitting a new 52-week high of 501.17 earlier in the day. The Dow Jones Industrial Average gained 2.3 percent, or 249.76 points, to end the day at 11,255.78.

But analysts think the rally — fed by a strong start to the holiday season, a rebound in luxe spending and, on Wednesday, positive news about manufacturing and private-sector employment — is at least somewhat overdone.

“I would say that it’s not sustainable,” said Andrew Fitzpatrick, director of investments at Hinsdale Associates. “I think they’ve run up too fast here. A pullback is warranted. There are going to be some bumps in the road and when we do hit those bumps, these stocks are going to feel it pretty sharply.”

Investors are betting that the historical recovery pattern is reasserting itself and that retail stocks will lead the markets up, said Kenneth Stumphauzer, analyst at Sterne Agee. But Stumphauzer said he’s not buying into that thesis, even with last month’s comparable-store sales expected to turn in the best showing since November 2007 and rise 3.5 percent.

“I still have a hard time believing this is going to be a traditional recovery,” he said, adding that all retailers would not rebound equally.

Retail stocks have also run up as investors speculated which companies are the likeliest to follow on the heels of J. Crew Group Inc. and ink a deal to get taken private.

There have also been hints outside of retail that the economy is pointed in the right direction, despite the credit concerns raised by Ireland’s fiscal woes.

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