Aeropostale Inc. has had trouble selling itself as a fashion authority to its target audience of teens in the U.S. The company is now hoping to find greater acceptance abroad.
The retailer on Thursday inked a deal to open about 60 freestanding stores and 150 shop-in-shops in India and Indonesia. It’s the first of several international licensing deals Aeropostale expects to complete this year.
The specialty retailer said the expansion plans in Asia are being done via licensing agreements with Arvind Lifestyle Brands Ltd. in India, and PT Mitra Adiperkasa TBK (MAP) in Indonesia.
Aéropostale’s shares jumped 5 percent at the morning bell to $1.73 on the news.
“India and Indonesia are two of the most populated countries in the world and we see significant opportunities by bringing the Aéropostale brand to these key countries,” said Julian Geiger, chief executive officer. “Following the successful launch of our brand in the Philippines and Singapore, we are excited to capitalize on the strong growth prospects in both India and Indonesia. We are totally comfortable partnering with two of the largest and strongest retailers in their respectful regions, Arvind Lifestyle Brands Ltd. and MAP.”
Arvind in May opened the first store in India for Gap. The unit in Select City Walk Mall in Delhi, contains Gap, GapKids and BabyGap merchandise. Arvind said it’s planning to open several additional Gap stores in India this year.
In Indonesia, about a dozen standalone Aeropostale stores are expected to open over the next five years. The first store is slated to open in Jakarta in fall 2016.
In India, Aeropostale expects to open 50 freestanding stores and 150 shops-in-shop “in select locations, and e-commerce operations across the country over the next five years, beginning in March 2016,” the company said.
“We anticipate ending the year with over 300 locations across 17 countries,” the ceo added. “Our aggressive international growth underscores the strength and recognition of the Aéropostale brand, and we look forward to announcing new global licensing partnerships throughout the year.”
The expansion strategy follows year-end results reported this past spring that showed a wider year-over-year loss — although the company showed improvement in the fourth quarter. More recently, the retailer’s top merchant departed the company.
Aeropostale recently admitted defeat on the fashion front, saying it would no longer target teens that look for the latest styles, but rather teens it described as having more of a tomboy sensibility. “We’ll be targeting the real teen, not the fast-fashion teen we have tried to satisfy in the recent past,” said Geiger at the time.
The new merchandise mix and other strategic changes will initially be apparent in back-to-school sets. The back-to-school period, where the retailer has historically marked merchandise down by as much as 70 percent, will be critical to Aeropostale as it tests its theory that teens want preppy basics – the type American Eagle Outfitters and Abercrombie & Fitch dropped in favor of chasing trends.
The teen retail category has been among the most difficult in the last two years. Wet Seal closed two-thirds of its stores, while Delia’s and Deb Shops liquidated. Abercrombie & Fitch has closed 275 stores since 2010, and plans to shutter 60 more this year.