Teen retailer Aéropostale Inc. said it has implemented a cost reduction program that includes cutting its corporate headcount by 100 positions, a 13 percent decrease, by the end of fiscal 2015.
The teen specialty chain also reaffirmed its fourth quarter guidance, expecting operating results for the quarter to range from break even to a loss of $10 million, or a net loss of between 4 cents to 17 cents a diluted share. The company said Tuesday that after a strategic business review, it has an “aggressive new cost reduction program targeting both direct and indirect spending across the organization.” The program is expected to generate about $35 million to $40 million in annualized pre-tax savings, expected to be achieved in fiscal 2016. Pre-tax cash expenses of $1.5 million are expected to be recorded during fiscal 2015, the company said.
Separately, Julian R. Geiger, chief executive officer, has voluntarily relinquished 1 million stock options that had been granted to him by the company. The shares instead would be used by the retailer to motivate and retain other key members of the organization, Aéropostale said.
The company last month managed to top expectations for the third quarter, posting an adjusted loss of 31 cents a share, which was better than the estimate loss of 34 cents some analysts had projected. The retailer missed on sales, reporting just $363.3 million versus the $452.9 million a year earlier. Wall Street was expecting sales of $393 million.
Aéropostale is not in compliance with the listing requirements of the New York Stock Exchange, and is working with the exchange to address meeting this requirement.
Shares of Aéropostale closed down 5.2 percent to nearly 24 cents in Big Board trading Tuesday. The company disclosed its cost reduction program after the markets closed.