Shares of Aeropostale Inc. (NYSE:ARO) plunged 22 percent Friday after the struggling teen apparel retailer posted a 20 percent drop in sales that resulted in a quarterly loss. The New York-based company faced multiple issues and was hurt by its merchandise assortment, unseasonably cool weather and the West Coast port slowdown.
Shares of Aeropostale sank 22.5 percent to $2 in premarket trading Friday.
Aeropostale, which has a market value of $200 million, has seen its shares fall 42 percent in the last 12 months as the company struggles to compete with chains like H&M and Forever 21. The company opened one Aeropostale store during the quarter and closed 12 stores.
For the quarter ended May 3, Aeropostale reported a loss of $45.3 million, or 57 cents per share, as revenue dropped 20 percent to $318.6 million. That compared with a loss of $76.8 million, or 98 cents per share, on sales of $395.9 million during the same period in 2014.
The company also forecast a wider-than-expected loss for the current quarter, which includes the beginning of the key back-to-school period for retailers. For the second quarter, Aeropostale projects a loss of 52 cents to 60 cents a share, compared with Wall Street expectations for a loss of 45 cents a share, according to Reuters’ data.
"As I have said previously, the Back to School period represents the time when all of the disciplines and strategies we have instituted over the last nine months should come to fruition,” Julian R. Geiger, chief executive officer, said in a statement Thursday. “To prepare for this key selling season, we are focused on optimizing the quantity and composition of our merchandise to ensure a successful Back to School launch.”
With notable challenges ahead of a crucial back-to-school season, Tuna Amobi, equity analyst at S&P Capital IQ, cut the firm's 12-mongth price target on Aeropostale by 50 cents to $2.50.