Aeropostale, the preppy teen retailer that for years was a third-best to Abercrombie and American Eagle, just reported a steep 20% decline in sales for the first quarter.
It's the worst sales decline since the company went public in 2002. Aeropostale also reported a net loss of $45.3 million, its 10th straight quarterly loss.
Aeropostale's chief executive officer, Julian Geiger, reiterated his message to investors that the company's turnaround won't truly take hold until this fall's back-to-school shopping season. He noted that the disastrous first quarter "represented a period of transition" for the teen retailer, as it worked through off-message merchandise and coped with the West Coast port slowdown and unseasonably cool weather. Last year, Aeropostale's sales tumbled 12% after falling 12% in 2013. The chain has also been shuttering stores nationwide.
"As I have said previously, the back-to-school period represents the time when all of the disciplines and strategies we have instituted over the last nine months should come to fruition," Geiger said in a statement today. "We are enthusiastic about seeing the results that this key period will bring."
Geiger returned to the company in August after serving as the CEO of cupcake chain Crumbs, which filed for bankruptcy last summer. He has promised big changes to Aeropostale's clothes, pricing, and presentation for the fall.
The retailer has been trying everything to win teens back: Last year, it rebranded itself as "Aero" and introduced a new logo, buying up Twitter ads to tell teens that "WE ARE A GENERATION OF NOW." It partnered with Vine stars and YouTube personality Bethany Mota for collections after observing that teens now seem to hang out on social media instead of at the mall. Earlier this year, executives stated plans to refine its merchandise to target a female customer known internally as "the flirty tomboy."
But the company continues to be dogged by massive sales declines — this quarter represents its seventh double-digit drop in a row.
In many ways, Aeropostale is at the worst possible intersection of a number of retail trends: the rise of fast-fashion behemoths like H&M and Forever 21, declining foot traffic at malls, and a generational shift away from the logos and preppy styles popularized by Abercrombie. Teens have far more options on where to shop today than they did at Aeropostale's peak.
"Frankly, if back-to-school does not work, we believe investors will increasingly question the viability of the chain," Eric Beder, an analyst at Wunderlich, wrote in a May 18 note. "We see no reason to be involved in ARO until there is some definite proof of a turn."
