Aeropostale Earnings: Tops Revenue Estimate, Yet Margins Shrink

Aeropostale Inc. (NYSE:ARO) reported its results for the first quarter. Aeropostale is a mall-based retailer that sells casual apparel and accessories for young adults.

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Aeropostale Earnings Cheat Sheet for the First Quarter

Results: Net income for Aeropostale Inc. fell to $10.6 million (13 cents per share) vs. $16.4 million (20 cents per share) a year earlier. This is a decline of 35.4% from the year-earlier quarter.

Revenue: Rose 6% to $497.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Aeropostale Inc. fell in line with the mean analyst estimate of 13 cents per share. Analysts were expecting revenue of $490.1 million.

Quoting Management: Thomas P. Johnson, Chief Executive Officer, commented,”During the first quarter, we continued to make progress on our key initiatives, and we experienced a significant improvement in trends versus the fourth quarter. This accomplishment was a result of the efforts of our entire organization, and I continue to be very proud of our team’s contributions and dedication.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 1.2 percentage points to 28% from the year-earlier quarter. Over that time, margins have contracted on average nine percentage points per quarter on a year-over-year basis.

The company reported a year-over-year revenue increase last quarter, ending a three-quarter streak of decline. Revenue fell 3.7% in the fourth quarter of the last fiscal year, 1% in the third quarter of the last fiscal year and 5.4% in the second quarter of the last fiscal year.

The company met estimates last quarter after toppling them in the two previous quarters. In the fourth quarter of the last fiscal year, it topped the mark by 6 cents, and in the third quarter of the last fiscal year, it was ahead by 3 cents.

Net income has dropped 64.1% year-over-year on average across the last five quarters. Performance was hurt by a 93.3% decline in the second quarter of the last fiscal year from the year-earlier quarter.

Over the past three months, the average estimate for the fiscal year has climbed from $1.16 per to share to $1.24.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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