Bulls and Bears Do Battle in Aeropostale (ARO); Turnaround Intact?
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Rating Summary:
5 Buy, 25 Hold, 2 Sell
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Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Rating Summary:
5 Buy, 25 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
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In the wake of Aeropostale's (NYSE: ARO) disappointing Q1 report yesterday, many are questioning the viability of the company's turnaround efforts. This morning several analysts commented with thoughts on Aeropostale. Brean's Eric Beder made the argument for bears. Wedbush analyst Betty Chen argued the bull case.
Yesterday Aeropostale reported Q1 EPS of ($0.16), $0.01 better than the analyst estimate of ($0.17). Revenue for the quarter came in at $452.3 million versus the consensus estimate of $444.26 million. Comps decreased 14%. Q2 guidance was below the Street at ($0.20)-($0.15) versus the consensus of ($0.06).
Commenting, Beder said, "We believe the near-term euphoria in the name remains undeserved and Aeropostale faces competitive and pricing issues that we believe will, in the near term, obviate any gains from new, fashion driven merchandise which is on track to roll out for back to school . . . At best, ARO apologists can point to back to school for a possible turn; we believe the case for a turn at the business continues to fade and the Aeropostale business model remains under highly competitive pressures and limited pricing flexibility that should continue to disappoint investors."
Chen obviously disagrees. She thinks enhanced fashion mix, a nimble supply chain, and leaner buys will support comps and margins in H2.
"While we view below-consensus Q2 guide as disappointing, we note the critical elements of the ARO turnaround story remain intact as we anticipate the launch of revamped BTS assortments complemented by a more emotional marketing campaign and distinct planning and allocation system in H2 to restore business fundamentals . . . Management is focused on head-to-toe dressing, elevated trim and finishes, and emotional in-store presentation/marketing along with the ability to chase better-performing items within ~20-120 days and leaving +LDD open to buy. Moreover, implementation of allocation by store profile currently underway could drive efficiency/margin benefits," she said.
Aeropostale trades lower by 6% pre-market on Friday.
Brean has a Sell Rating on Aeropostale with a price target of $11.
Wedbush has an Outperform rating on Aeropostale with a modified price target of $17.00 (from $15.00).
For an analyst ratings summary and ratings history on Aeropostale, Inc. (NYSE: ARO) click here. For more ratings news on Aeropostale, Inc. click here.
Shares of Aeropostale, Inc. closed at $16.48 yesterday.
Yesterday Aeropostale reported Q1 EPS of ($0.16), $0.01 better than the analyst estimate of ($0.17). Revenue for the quarter came in at $452.3 million versus the consensus estimate of $444.26 million. Comps decreased 14%. Q2 guidance was below the Street at ($0.20)-($0.15) versus the consensus of ($0.06).
Commenting, Beder said, "We believe the near-term euphoria in the name remains undeserved and Aeropostale faces competitive and pricing issues that we believe will, in the near term, obviate any gains from new, fashion driven merchandise which is on track to roll out for back to school . . . At best, ARO apologists can point to back to school for a possible turn; we believe the case for a turn at the business continues to fade and the Aeropostale business model remains under highly competitive pressures and limited pricing flexibility that should continue to disappoint investors."
Chen obviously disagrees. She thinks enhanced fashion mix, a nimble supply chain, and leaner buys will support comps and margins in H2.
"While we view below-consensus Q2 guide as disappointing, we note the critical elements of the ARO turnaround story remain intact as we anticipate the launch of revamped BTS assortments complemented by a more emotional marketing campaign and distinct planning and allocation system in H2 to restore business fundamentals . . . Management is focused on head-to-toe dressing, elevated trim and finishes, and emotional in-store presentation/marketing along with the ability to chase better-performing items within ~20-120 days and leaving +LDD open to buy. Moreover, implementation of allocation by store profile currently underway could drive efficiency/margin benefits," she said.
Aeropostale trades lower by 6% pre-market on Friday.
Brean has a Sell Rating on Aeropostale with a price target of $11.
Wedbush has an Outperform rating on Aeropostale with a modified price target of $17.00 (from $15.00).
For an analyst ratings summary and ratings history on Aeropostale, Inc. (NYSE: ARO) click here. For more ratings news on Aeropostale, Inc. click here.
Shares of Aeropostale, Inc. closed at $16.48 yesterday.
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