Investors were not happy hearing that Emilia Fabricant, executive vice president and top merchandiser, has left teen retailer Aéropostale Inc.
They sent shares of the company down 8.2 percent to close at $1.79 in trading on the New York Stock Exchange.
Julian Geiger, chief executive officer of the teen chain, will supervise the senior merchandising team, the company said. Aéropostale has “no plans to seek a replacement” for Fabricant at this time.
Jefferies analyst Randal J. Konik said, “While management has pointed to the back-to-school season as a potential inflection point, the departure may signal that first-quarter weakness has extended into the second quarter, reinforcing our caution on a near-term turn.” He has a “Hold” rating on the stock.
Fabricant — whose total annual pay for the 2014 was $1.4 million, according to retailer’s proxy statement — joined the company in August 2012. Konik noted that she was unable to reverse the negative comp trend of the past four years. “Despite efforts to reinvigorate the brand with a focus on fashion and new sub-labels/partnerships — for example, Live, Love Dream, Bethany Mota, Tokyo Darling — trends have showed minimal signs of stabilization,” he said, adding that recent discussion around the merchandising strategy has centered on dialing back some of the fashion focus with an eye towards returning to a “better balance of fashion versus basics.”
Stifel analyst Richard E. Jaffe noted that sales and margins “declined significantly since 2012 as the updated, merchandise assortment failed to resonate with the consumer.” He also has a “Hold” rating on the stock.
Fabricant was previously president of Bebe Stores Inc., and while Jaffe said her departure wasn’t a surprise, it was unclear how much of a role Fabricant had in the creation of the upcoming back-to-school merchandise. And having Geiger assuming the chief merchant’s role isn’t necessarily a clear-cut positive for the retailer. Jaffe said, “Ceo Geiger’s merchandising skills, while historically very effective, have not been evident since he left Aéropostale in the fourth quarter of 2010, which was a very different time for Aéropostale and teen retail, with success driven by promotionally priced logo tees, hoodies and denim.”
Geiger, who returned to the company in August 2014, believes that the company will begin to see progress with the back-to-school selling cycle.
The ceo said over the “past ten months, we have carefully instituted structural changes to our organization that enabled us to balance levels of responsibility and to run our business more effectively. In conjunction with these changes, I believe that the strength of our senior design and merchandising teams positions us well on our path to profitability.”
He added the “merchandising, organizational and operational changes we have made since last year will change the trajectory of our business in the back-to-school and holiday periods.”
Earlier this month, Geiger bought 250,000 shares of the company at $1.92 each, according to a Securities and Exchange Commission filing. The 52-week low is $1.70 and the high is $4.39.
Buying company stock is often an executive’s way of showing confidence in the future of the firm.