Aeropostale taps past CEO in hopes of having a future
Aeropostale (ARO) has tapped its former CEO for the top job again, hoping lightning can strike twice.
The teen apparel retailer, which has taken a beating as its young customers have moved on to fast fashion chains like H&M and Uniqlo or simply shifted their spending to electronics, said on Monday that Julian Geiger, who resigned as CEO in 2010, has taken the reins again, effective immediately.
His return marks the end of a failed tenure of Tom Johnson, on whose watch Aeropostale’s sales and profits have evaporated. Aeropostale’s annual sales peaked at $2.4 billion in 2010 and by 2013 they had fallen to $2.09 billion. The losing streak continued this year: comparable sales, which strip out the numbers from newly opened or newly closed stores, fell 13%, a deeper decline than the 10.5% drop Wall Street analysts polled by Thomson Reuters were expecting. (The company will report full quarterly results on Thursday.)
Geiger, who was CEO of the now bankrupt and crumbling Crumbs Bake Shop cupcake chain until December, was Aeropostale’s CEO from 1996 to 2010 and oversaw a period of astronomical growth for a brand that started life in the early 1980’s as a young men’s fashion brand created by Macy’s (M): The stock rose more than 800% during his reign and revenue almost doubled between 2006 and 2010, when Aeropostale was at peak popularity.
That is kind of growth Aeropostale’s board pointed to in explaining their choice of Geiger, whose return was telegraphed when he rejoined the board earlier this year.
“Julian was the leader of Aeropostale’s strategic direction during a period of significant growth, and we are confident in his enthusiasm for the business, his understanding of today’s teen retail marketplace and his intuition regarding teen fashion,” Aeropostale Chairperson Karin Hirtler-Garvey said in a statement.
But the tide has turned dramatically in the teen apparel sector. And for Aeropostale, the decline was especially brutal compared to that at American Eagle Outfitters (AEO) and Abercrombie & Fitch (ANF) because it caters to a lower income customer than its two arch-rivals.
In May, private equity firm Sycamore Partners gave Aeropostale a $150 million line of credit a week after the retailer reported an 83% drop in cash holdings versus a year earlier, easing fears of a near-term cash crunch.
Geiger’s return is the latest case of an ex-CEO returning to the fold to fix a troubled company: in 2013, J.C. Penney (JCP) and Procter & Gamble (PG) brought back Mike Ullman and A.G. Lafley, respectively.
Still, investors seemed pleased by Aeropostale’s move — shares rose 6.5 percent to $3.45 in after-hours trading.