Aéropostale (ARO) said on Thursday it may sell itself, a development that comes as the teen retailer reported yet another quarter of sales declines.
The retailer, which unlike its peers American Eagle Outfitters (AEO) and Abercrombie & Fitch (ANF) has not been able to return to growth as young consumers turn away from brands, said comparable sales fell 6.7% during the holiday quarter. Net sales decreased 16.1% to $498 million, $22 million less than expected, while net loss came to $21.7 million.
Aéropostale has stumbled as its lower-income shoppers have pulled back or shopped elsewhere amid fashion stumbles. It shares have been trading below $1 for so long that it runs the risk of being delisted by the New York Stock Exchange. Shares on Thursday were trading at 48 cents , about 14% of their 52 week high of $3.64.
A sale or restructuring of the company are among the so-called strategic alternatives Aéropostale said it was exploring.
Adding to the retailer’s challenges, it is feuding with a key vendor, MGF Sourcing US, an affiliate of Sycamore Partners, and said that could cause a liquidity problem as well as a disruption in the supply of some merchandise. CEO Julian Geiger said that dispute made it impossible to know whether Aéropostale could begin to recover this year.
He also tried to put a positive spin on the latest batch of awful financial results, saying “the initial reaction to both our Spring product and our two-chain Factory and Mall strategy is very encouraging.”
The fact remains this retailer is in critical condition- sales have fallen to $1.5 billion last year from $2.39 only three years earlier. And its cash was down to $65 million at the end of January, from $152 million a year earlier. Time is running out.