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Aéropostale Readies Entry Into Canada

Aéropostale will enter the international market for the first time when it opens two stores in Canada.

NEW YORK — Aéropostale will enter the international market for the first time when it opens two stores in Canada later this summer, executives told shareholders at its annual meeting here last Wednesday.

The specialty teen retailer will open in Toronto and Vancouver as part of an overall growth plan that calls for no less than 10 new Canadian stores, and an additional 75 U.S. stores by the end of 2007.

“We see an emerging and large international opportunity north of the border,” said chairman and CEO Julian Geiger. “The land mass is greater then the U.S., but the population is about one-tenth as big. So if we think we can have 1,000 stores in the U.S., we can definitely have up to 100 stores in Canada.” Aéropostale currently operates 728 stores in the U.S.

Also this year, Geiger said, the New York City–based retailer will open a West Coast distribution center in Los Angeles, implement a new allocation system and place renewed emphasis on marketing. The company will also continue to roll out Aéropostale’s updated store format featuring skylights, floor-to-ceiling stretches of bamboo and lifestyle graphics.

One division that will not see any rollouts in the year ahead is Jimmy’Z, a California lifestyle concept the company launched in 2005. “We haven’t been totally happy with merchandise at Jimmy’Z,” said Geiger. “We’re continuing to modify the assortment. But the focus is on Aéropostale.”

A revitalized, more fashion-forward assortment at Aéropostale’s retail locations helped make 2006 a year of record sales and earnings for the teen retail chain. “A couple of years ago we had lost merchandise balance a little bit,” explained Geiger. “But our comp-store sales have been up and we feel really good about the balance of our assortment.”

Net income rose 27 percent last year to $106.6 million, on a 17 percent sales jump to $1.4 billion. Total sales have grown significantly from less than $200 million in 1999 when the company went public. In the first quarter, profits skyrocketed 64.4 percent to $13.8 million from $8.4 million in the same year-ago quarter. Sales climbed 12 percent to $275.8 million from $246.3 million, while same-store sales gained 2.5 percent.

This year, Geiger said the company is projecting earnings-per-share increases of 20 percent, along with continued comp-store sales gains.

At the meeting, Geiger called attention to the firm’s new president and chief merchandising officer, Mindy Meads, who he thinks will help fuel future success at Aéropostale. “Mindy brings great leadership and a very keen fashion eye,” said Geiger in an interview with DNR following Wednesday’s meeting. “The organization has done a terrific job revitalizing the brand and brand image.”