Aeropostale Inc.ARO

Morningstar Rating

Stock Research and Analysis

by Zoe Tan

Aeropostale's promotional merchandising strategy has worked well in the challenging retail environment, and we believe this has helped the company gain market share from its pricier teen retailing peers in recent years. This value-oriented player will Read more

Bulls Say

Prolonged high unemployment among youths could bode well for this low-priced retailer, as teens would continue to look for cheaper alternatives to stretch their budgets.

The new P.S. from Aeropostale kids concept should drive near-term growth, especially since the firm already has an existing customer base of parents shopping at its namesake Aeropostale chain.

Aeropostale should benefit from shorter lead times and improved sell-through in the near term, thanks to supply chain efficiencies and product allocation systems. Read more

Bears Say

Higher input costs due to the increase in commodity prices and labor costs in China, where the bulk of manufacturing facilities are located, could weigh on merchandise margins in the near term.

Rapidly growing fast-fashion retailers like H&M and Forever 21, which offer teens low-priced trendy merchandise, threaten to steal share from Aeropostale.

Aeropostale's upside will likely be limited, as there are few catalysts in sight that could enable the firm to match the 8%-10% same-store sales growth posted over the past two years.

Teen retailing is an extremely competitive business. Any merchandising missteps could put the brand out of favor with its core customer base. Read more

Strategy

Aeropostale focuses its merchandise assortment on basic apparel sold at low prices to reflect the tastes of its youthful customers. The retailer relies on promotional pricing throughout the year to drive Read more

Management

Aeropostale veteran Julian Geiger stepped down from his CEO role at the end of 2009 and remains chairman of the board. Geiger, who has led the company since 1996, will be succeeded by co-CEOs Mindy Meads and Thomas Johnson. Meads has served as president Read more

Profile

Aeropostale is a specialty retailer of casual apparel and accessories targeted at 14- to 18-year-old young women and men through its Aeropostale stores and 7- to 12-year-old Read more

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