Holiday clearance activity pushed Aéropostale Inc.’s fourth-quarter profit down 13.2 percent, below analysts’ estimates, and the teen retailer said it expects “inflationary pressures” to keep first-quarter and full-year earnings below Wall Street’s projections as well.
The New York-based firm said Thursday that it registered a profit of $83.8 million, or 95 cents a diluted share, for the period ended Jan. 29. This compared with analysts’ projections for EPS of 97 cents and year-ago income of $96.6 million, or 99 cents a share.
Net sales rose 4.8 percent to $839.3 million, above estimates of $835.5 million, from $801.2 million a year earlier. Quarterly same-store sales fell 3 percent as gross margin slid to 35.5 percent of sales versus 38.8 percent a year ago.
“While we’re proud of our accomplishments for the year, we had two primary challenges,” said chief executive officer Thomas Johnson on an afternoon conference call. “First, the teen retail environment was highly promotional. Second, we did not fully deliver a cohesive women’s assortment either in terms of fashion or color. As a result, our fourth-quarter performance did not meet our expectations.”
While the ceo warned of upcoming “unprecedented inflationary pressures,” he assured analysts and investors that the women’s assortment for fall and holiday 2011 now has the “right balance” of fashion and color.
Johnson became ceo of the firm in December following the departure of Mindy Meads, with whom he’d shared the title of co-ceo.
For the year, Aéropostale’s income rose 0.8 percent to $231.3 million, or $2.49 a diluted share, compared with income of $229.5 million, or $2.27 a share, in 2009. Sales grew 7.6 percent to $1.51 billion from $1.38 billion.
Due to costing increases of 3 percent to 5 percent in the first half of the year and increases of 10 percent to 15 percent in the second half, the company said it expects first-quarter EPS of 35 to 38 cents, and full-year EPS of $2.20 to $2.40.
Analysts were looking for first-quarter EPS of 43 cents and annual EPS of $2.57.