Aeropostale Inc.’s (ARO) fiscal 2009 third-quarter net income jumped nearly 47% year over year to $62.6 million. Earnings per share came in at 92 cents, edging past the Zacks Consensus Estimate, for the 5th consecutive instance, by a penny. The result was also higher than the company’s upgraded guidance of 90 cents to 91 cents per share announced in early November.
The specialty retailer for teenagers recorded a solid 17.8% year-over-year growth in sales to $567.8 million driven by a 10% expansion in same-store sales, a metric widely used for judging a retailer’s performance. The growth in sales was also boosted by a 4.5% increase in total square footage as the company added 40 stores across the U.S. and Canada, compared to the year-ago quarter.
Low-priced teen retailers such as, Aeropostale and Buckle Inc. (BKE) have been able to negotiate macroeconomic headwinds successfully by offering value to price conscious customers. On the other hand, more expensive competitors such as, Abercrombie & Fitch Co. (ANF) continue to witness a slump in same-store sales.
Aeropostale’s gross margin rose by 330 basis points (bps) to 39.3%, while selling, general and administrative expenses, as a percentage of sales, dipped by 70 bps to 20.6% due to the management’s cost-control measures and efforts to align merchandise assortment in accordance with sales trends.
Accordingly, the company recorded an impressive 50.2% growth in operating income to $105.7 million during the quarter, while operating margin grew by 400 bps to 18.6%. During the quarter, Aeropostale opened 18 new stores, bringing its total store count to 945 at quarter-end. For fiscal 2010, the company plans to spend approximately $70 million towards the launch of about 50 to 55 new stores, 40 store remodels and certain information technology investments.
Meanwhile, Aeropostale recorded a solid start to the crucial holiday selling season by posting a 14% year-over-year growth in November sales to $228.0 million driven by a 7% expansion in same-store sales. Accordingly, the company anticipates fiscal 2009 fourth quarter earnings to range between $1.20 and $1.24 per share, compared to $1.01 per share recorded in the year-ago period.
The guidance is in line with the Zacks Consensus Estimate of $1.23 per share, which has edged up a penny in just the past week as 1 analyst, out of 26 who cover the stock, raised expectation.
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