Tuesday, May 27, 2008

Aeropostale Shrinking Cash Position

Aeropostale Inc (ARO) which bills itself as a mall-based specialty retailer of active and casual apparel for young men and women reported improved earnings and a 10% increase in same store sales. This compares very nicely to an increase of 3% in the year-ago period. Overall sales increased by 22%.

Julian R. Geiger, Chairman and Chief Executive Officer said, “We are thrilled with our record first quarter performance and solid start to fiscal 2008. Our spring merchandise assortment was very well received and Aéropostale continues to gain brand preference among teen customers. During the quarter we remained committed to striking the right balance between fashion and value, while appropriately managing our inventory levels. As we head into the second quarter and important back-to-school selling season, we believe we are well positioned to continue to capture additional market share.”

That’s it. They nailed the merchandising strategy, finding the sweet spot between value and fashion. Catering to the teenage crowd that is quite an achievement.
They left out a few things. No substantive comment was made on store opening strategies. Also no comment was made on the radically shrinking cash position.

If these guys want to build a loyal following they will have to increase the transparency and start to engage investors. What happens when you miss the merchandising strategy how does an investor maintain confidence.