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Form 8-K AEROPOSTALE INC For: Aug 27

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August 27, 2015 4:08 PM EDT



 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 27, 2015

Aéropostale, Inc.
(Exact name of registrant as specified in its charter)

Delaware
 (State or other jurisdiction of incorporation)
 
001-31314
 (Commission File Number)
 
31-1443880
 (IRS Employer Identification No.)
112 West 34th Street, 22nd Floor, New York, New York 10120
(Address of principal executive offices, including Zip Code)

(646) 485-5410
(Registrant's telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))
 
 
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))


 
 

 

 








































ITEM 2.02
Results of Operations and Financial Condition.
 
 
 
On August 27, 2015, Aéropostale, Inc. (the “Company”) issued a press release announcing second quarter of fiscal 2015 earnings results. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated into this Item 2.02 by reference.
 
 
 
 
The information under this Item in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto is being furnished to the Securities and Exchange Commission, shall not be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities thereof, nor shall it be deemed to be incorporated by reference into any filing under the Exchange Act or under the Securities Act of 1933, as amended, except to the extent specifically provided in any such filing.
 
 
ITEM 9.01
Financial Statements and Exhibits.
 
(d) Exhibits
 
 
 
 
99.1     
Press release, dated August 27, 2015, announcing second quarter of fiscal 2015 earnings results






























SIGNATURES
According to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Aéropostale, Inc.




/s/ Marc G. Schuback
Marc G. Schuback
Senior Vice President, General Counsel & Secretary

Dated: August 27, 2015














































Exhibit Index

Exhibit No.
Exhibit
99.1
Press release, dated August 27, 2015, announcing second quarter of fiscal 2015 earnings results






Exhibit 99.1


AÉROPOSTALE REPORTS RESULTS FOR SECOND QUARTER OF FISCAL 2015

New York, New York, August 27, 2015 -- Aéropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of casual apparel for young women and men, today reported results for the second quarter of fiscal 2015, and provided guidance for the third quarter of fiscal 2015.

Second Quarter Performance
For the second quarter of fiscal 2015, net sales decreased 17% to $326.9 million, from $396.2 million in the year ago period. Comparable sales, including the e-commerce channel, for the second quarter of fiscal 2015 decreased 8%, compared to a decrease of 13% for the corresponding 13-week period ended August 2, 2014.

The Company reported a net loss for the second quarter of fiscal 2015 of $43.7 million, or $0.55 per diluted share, which included:

•
an after-tax charge of approximately $2.9 million, or $0.04 per diluted share, resulting from store closing costs;
•
and an after-tax charge of $2.4 million, or $0.03 per diluted share, due to consulting fees; offset by
•
an after-tax benefit of $6.4 million, or $0.08 per diluted share, due to reversals of previously established exit cost obligation liabilities resulting from subsequent lease terminations.
 
Excluding the aforementioned charges, the Company reported an adjusted net loss of $44.8 million, or $0.56 per diluted share in the second quarter of fiscal 2015 (see Exhibit D).

The Company reported an operating loss for the second quarter of fiscal 2015 of $37.4 million or, excluding the aforementioned charges, an adjusted operating loss of $38.6 million.

Julian R. Geiger, Chief Executive Officer, commented, “The second quarter was an important transitional time for us in which we set the stage for the second half of the year. We attained very high levels of merchandise currency, we delivered our new back to school merchandise, and we refocused our marketing efforts around key items, all while attaining operating results consistent with the better end of our guidance.”

Cash and Investments

The Company ended the quarter with cash and cash equivalents of $86.5 million and $142.7 million in long-term debt.

The Company closed 23 Aéropostale stores during the quarter. For the second quarter, the Company invested $6.0 million in planned capital expenditures.

On August 18, 2015, the Company closed on an amended credit facility. This $215 million credit facility now expires in February 2019 at the earliest, aligns with the Company’s current asset base and increases overall availability as compared to the previous credit facility.

Third Quarter Guidance
For the third quarter of fiscal 2015, the Company expects operating losses in the range of $19.0 to $25.0 million, which translates to a net loss in the range of $0.30 to $0.38 per diluted share. The effective tax rate for the third quarter is projected to be approximately 4.0%. This outlook excludes the impact of any store impairments or accelerated store closing costs which may be identified, and consulting fees.


1


Mr. Geiger continued, “We are encouraged by our progress during the initial part of the Back-To-School season, especially the significant improvement in our girls business. Our third quarter outlook reflects a continuation of the momentum we have generated in the quarter-to-date period. This guidance indicates a significant reduction in operating loss versus last year.”

Use of Non-GAAP Measures
The Company believes that the disclosure of adjusted net loss and adjusted loss, which are non-GAAP financial measures, provides investors with useful information to help them better understand the Company’s results (see Exhibit D).

Conference Call Information
The Company will be holding a conference call today at 4:15 P.M. ET to review its second quarter results. The broadcast will be available through the ‘Investor Relations’ link at www.aeropostale.com or by dialing 877-407-9039 approximately 10 minutes prior to the scheduled time with the passcode “Aeropostale.” A replay will be available approximately one hour after the recording through Thursday, September 3, 2015 and can be accessed by dialing 877-870-5176, using the required passcode 13617667. An archive will also be available at the Aeropostale website for 12 months.

About Aéropostale, Inc.
Aéropostale, Inc. is a specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aéropostale stores and website and 4 to 12 year-olds through its P.S. from Aéropostale stores and website. The Company provides customers with a focused selection of high quality fashion and fashion basic merchandise at compelling values in an exciting and customer friendly store environment. Aéropostale maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise, other than in licensed stores. Aéropostale products can be purchased in Aéropostale stores and online at www.aeropostale.com. P.S. from Aéropostale products can be purchased in P.S. from Aéropostale stores, in certain Aéropostale stores and online at www.ps4u.com and www.aeropostale.com. The Company currently operates 759 Aeropostale® stores in 50 states and Puerto Rico, 41 Aéropostale stores in Canada and 26 P.S. from Aéropostale® stores in 12 states. In addition, pursuant to various licensing agreements, the Company's licensees currently operate 286 Aéropostale® and P.S. from Aéropostale® locations in the Middle East, Asia, Europe, and Latin America. Since November 2012, Aéropostale, Inc. has operated GoJane.com, an online women's fashion footwear and apparel retailer. GoJane products can be purchased online at www.gojane.com.

SPECIAL NOTE: THIS PRESS RELEASE AND ORAL STATEMENTS MADE FROM TIME TO TIME BY REPRESENTATIVES OF THE COMPANY CONTAIN CERTAIN "FORWARD-LOOKING STATEMENTS" CONCERNING EXPECTATIONS FOR SALES, STORE OPENINGS, GROSS MARGINS, EXPENSES, STRATEGIC DIRECTION AND EARNINGS. ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER INCLUDE, CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF NEW PRODUCTS OR PRICING CHANGES BY OUR COMPETITORS, CHANGES IN THE ECONOMY AND OTHER EVENTS LEADING TO A REDUCTION IN DISCRETIONARY CONSUMER SPENDING; SEASONALITY; RISKS ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER CONDITIONS AND THE POSSIBLE ADVERSE IMPACT OF CHANGES IN CURRENCY EXCHANGE RATES AND IMPORT RESTRICTIONS; RISKS ASSOCIATED WITH THE COMPANY’S DEBT ARRANGEMENTS; RISKS ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT ITS TURNAROUND STRATEGIES, AS WELL AS THE OTHER RISK FACTORS SET FORTH IN THE COMPANY'S FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS









2


EXHIBIT A



AÉROPOSTALE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)


 
August 1, 2015
 
January 31, 2015
 
August 2, 2014
 
(Unaudited)
 
 
 
(Unaudited)
ASSETS
 
 
 
 
 
Current Assets:
 
 
 
 
 
Cash and cash equivalents
$
86,515

 
$
151,750

 
$
152,274

Merchandise inventory
170,679

 
130,474

 
213,016

Other current assets
46,346

 
67,063

 
52,967

Total current assets
303,540

 
349,287

 
418,257

 
 
 
 
 
 
Fixtures, equipment and improvements, net
118,941

 
130,109

 
170,504

Goodwill and intangible assets
22,351

 
22,728

 
28,204

Other assets
8,551

 
10,065

 
17,817

 
 
 
 
 
 
TOTAL ASSETS
$
453,383

 
$
512,189

 
$
634,782

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
Accounts payable
$
136,236

 
$
88,289

 
$
137,307

Accrued expenses
81,185

 
110,560

 
109,556

Total current liabilities
217,421

 
198,849

 
246,863

 
 
 
 
 
 
Long-term debt
142,687

 
138,540

 
133,590

 
 
 
 
 
 
Other non-current liabilities
84,421

 
81,248

 
101,828

 
 
 
 
 
 
Stockholders’ equity
8,854

 
93,552

 
152,501

 
 
 
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
453,383

 
$
512,189

 
$
634,782














3


EXHIBIT B

AÉROPOSTALE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
SELECTED STORE DATA
(In thousands, except per share and store data)
(Unaudited)
 
13 weeks ended
 
 
August 1, 2015
 
August 2, 2014
 
 
 
 
% of sales
 
 
 
% of sales
 
Net sales
$
326,861

 
100.0
 %
 
$
396,155

 
100.0
 %
 
Cost of sales (including certain buying, occupancy and warehousing expenses) (1)
268,532

 
82.2
 %
 
333,605

 
84.2
 %
 
Gross profit
58,329

 
17.8
 %
 
62,550

 
15.8
 %
 
Selling, general and administrative expenses (2)
101,826

 
31.2
 %
 
121,182

 
30.6
 %
 
Restructuring (benefit) charges (3)
(6,066
)
 
(1.9
)%
 
3,019

 
0.8
 %
 
Loss from operations
(37,431
)
 
(11.5
)%
 
(61,651
)
 
(15.6
)%
 
Interest expense
2,848

 
0.9
 %
 
2,424

 
0.6
 %
 
Loss before income taxes
(40,279
)
 
(12.4
)%
 
(64,075
)
 
(16.2
)%
 
Income tax expense (benefit) (4)
3,380

 
1.0
 %
 
(256
)
 
(0.1
)%
 
Net loss
$
(43,659
)
 
(13.4
)%
 
$
(63,819
)
 
(16.1
)%
 
Basic loss per share
$
(0.55
)
 
 
 
$
(0.81
)
 
 
 
Diluted loss per share
$
(0.55
)
 
 
 
$
(0.81
)
 
 
 
Weighted average basic shares
79,570

 
 
 
78,753

 
 
 
Weighted average diluted shares
79,570

 
 
 
78,753

 
 
 
 
 
 
 
 
 
 
 
 
STORE DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable sales change (including e-commerce channel)
(8
)%
 
 
 
(13
)%
 
 
 
Stores open at end of period
826

 
 
 
1,072

 
 
 
Total square footage at end of period
3,180,595

 
 
 
4,006,232

 
 
 
Average square footage during period
3,233,657

 
 
 
4,031,075

 
 
 
 
 
 
 
 
 
 
 
 
(1) Cost of sales for the second quarter of 2015 was unfavorably impacted by store closing costs of $2.6 million ($2.9 million after tax, or $0.04 per diluted share). Cost of sales for the second quarter of 2014 was unfavorably impacted by asset impairment charges of $19.0 million ($18.5 million after tax, or $0.23 per diluted share).
 
 
 
 
 
 
 
 
 
(2) Selling, general and administrative expenses for the second quarter of 2015 was unfavorably impacted by real estate consulting fees of $2.3 million ($2.4 million after tax, or $0.03 per diluted share). Selling, general and administrative expenses for the second quarter of 2014 was unfavorably impacted by consulting fees of $3.1 million ($3.0 million after tax, or $0.04 per diluted share).
 
 
 
 
 
 
 
 
 
(3) Restructuring charges for the second quarter of 2015 included the benefit of reversals of previously established exit cost obligation liabilities resulting from subsequent lease terminations of $6.1 million ($6.4 million after tax, or $0.08 per diluted share). Restructuring charges for the second quarter of 2014 included severance and other exit costs of $3.0 million ($2.9 million after tax, or $0.04 per diluted share).
 
 
 
 
 
 
 
 
 
(4) Income tax benefit for the second quarter of fiscal 2014 was unfavorably impacted by the establishment of reserves against net deferred tax assets of $3.4 million after tax, or $0.04 per diluted share.



4


EXHIBIT C

AÉROPOSTALE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
SELECTED STORE DATA
(In thousands, except per share and store data)
(Unaudited)
 
26 weeks ended
 
 
August 1, 2015
 
August 2, 2014
 
 
 
 
% of sales
 
 
 
% of sales
 
Net sales
$
645,504

 
100.0
 %
 
$
792,013

 
100.0
 %
 
Cost of sales (including certain buying, occupancy and warehousing expenses) (1)
528,052

 
81.8
 %
 
658,966

 
83.2
 %
 
Gross profit
117,452

 
18.2
 %
 
133,047

 
16.8
 %
 
Selling, general and administrative expenses (2)
201,347

 
31.2
 %
 
240,627

 
30.4
 %
 
Restructuring (benefit) charges (3)
(6,008
)
 
(0.9
)%
 
37,508

 
4.7
 %
 
Loss from operations
(77,887
)
 
(12.1
)%
 
(145,088
)
 
(18.3
)%
 
Interest expense
6,235

 
0.9
 %
 
2,773

 
0.4
 %
 
Loss before income taxes
(84,122
)
 
(13.0
)%
 
(147,861
)
 
(18.7
)%
 
Income tax expense (benefit) (4)
4,805

 
0.8
 %
 
(7,260
)
 
(0.9
)%
 
Net loss
$
(88,927
)
 
(13.8
)%
 
$
(140,601
)
 
(17.8
)%
 
Basic loss per share
$
(1.12
)
 
 
 
$
(1.79
)
 
 
 
Diluted loss per share
$
(1.12
)
 
 
 
$
(1.79
)
 
 
 
Weighted average basic shares
79,423

 
 
 
78,655

 
 
 
Weighted average diluted shares
79,423

 
 
 
78,655

 
 
 
 
 
 
 
 
 
 
 
 
STORE DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparable sales change (including e-commerce channel)
(9
)%
 
 
 
(13
)%
 
 
 
Average square footage during period
3,261,443

 
 
 
4,048,609

 
 
 
 
 
 
 
 
 
 
 
 
(1) Cost of sales for the first twenty-six weeks of 2015 was unfavorably impacted by store closing costs of $4.9 million ($5.1 million after tax, or $0.06 per diluted share). Cost of sales for the first twenty-six weeks of 2014 was unfavorably impacted by asset impairment charges of $21.6 million ($21.0 million after tax, or $0.27 per diluted share).
 
 
 
 
 
 
 
 
 
(2) Selling, general and administrative expenses for the first twenty-six weeks of 2015 were unfavorably impacted by real estate consulting fees of $2.3 million ($2.4 million after tax, or $0.04 per diluted share) and favorably impacted by a retirement plan settlement adjustment of $1.1 million ($1.1 million after tax, or $0.01 per diluted share). Selling, general and administrative expenses for the first twenty-six weeks of 2014 was unfavorably impacted by consulting fees of $3.4 million ($3.3 million after tax, or $0.04 per diluted share).
 
 
 
 
 
 
 
 
 
(3) Restructuring charges for the first twenty-six weeks of 2015 included the benefit of reversals of previously established exit cost obligation liabilities resulting from subsequent lease terminations of $6.0 million ($6.4 million after tax, or $0.09 per diluted share). Restructuring charges for the first twenty-six weeks of 2014 included store asset impairment charges of $30.5 million ($29.1 million after tax, or $0.37 per diluted share) and other restructuring charges of $7.0 million ($6.7 million after tax, or $0.09 per diluted share).
 
 
 
 
 
 
 
 
 
(4) Income tax benefit for the first twenty-six weeks of fiscal 2014 was unfavorably impacted by the establishment of reserves against net deferred tax assets of $3.4 million after tax, or $0.04 per diluted share.





5


EXHIBIT D

AÉROPOSTALE, INC.
RECONCILIATION OF OPERATING LOSS, NET LOSS AND DILUTED LOSS PER SHARE
(In thousands, except per share)
(Unaudited)

The following table presents a reconciliation of operating loss, net loss and diluted loss per share on a GAAP basis to the non-GAAP adjusted basis discussed in this release.
 
13 weeks ended
 
August 1, 2015
 
August 2, 2014
 
 
Operating Loss
 
 
Net Loss
 
 
Diluted EPS
 
 
Operating Loss
 
 
Net Loss
 
 
Diluted EPS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As reported
$
(37,431
)
 
$
(43,659
)
 
$
(0.55
)
 
$
(61,651
)
 
$
(63,819
)
 
$
(0.81
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring charges (benefit) (1)
 
(6,066
)
 
 
(6,428
)
 
 
(0.08
)
 
 
3,019

 
 
2,927

 
 
0.04

Store closing costs
 
2,646

 
 
2,864

 
 
0.04

 
 
—

 
 
—

 
 
—

Consulting costs
 
2,283

 
 
2,420

 
 
0.03

 
 
3,101

 
 
2,980

 
 
0.04

Store asset impairment charges
 
—

 
 
—

 
 
—

 
 
19,009

 
 
18,486

 
 
0.23

Establishment of reserves against
 
—

 
 
—

 
 
—

 
 
—

 
 
3,440

 
 
0.04

net deferred tax assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As adjusted
$
(38,568
)
 
$
(44,803
)
 
$
(0.56
)
 
$
(36,522
)
 
$
(35,986
)
 
$
(0.46
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26 weeks ended
 
August 1, 2015
 
August 2, 2014
 
 
Operating Loss
 
 
Net Loss
 
 
Diluted EPS
 
 
Operating Loss
 
 
Net Loss
 
 
Diluted EPS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As reported
$
(77,887
)
 
$
(88,927
)
 
$
(1.12
)
 
$
(145,088
)
 
$
(140,601
)
 
$
(1.79
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring charges (benefit) (1)
 
(6,008
)
 
 
(6,368
)
 
 
(0.09
)
 
 
7,011

 
 
6,731

 
 
0.09

Store closing costs
 
4,856

 
 
5,147

 
 
0.06

 
 
—

 
 
—

 
 
—

Consulting costs
 
2,283

 
 
2,420

 
 
0.04

 
 
3,387

 
 
3,252

 
 
0.04

Retirement plan settlement adjustment
 
(1,064
)
 
 
(1,099
)
 
 
(0.01
)
 
 
—

 
 
—

 
 
—

Store asset impairment charges (2)
 
—

 
 
—

 
 
—

 
 
52,133

 
 
50,047

 
 
0.64

Establishment of reserves against
 
—

 
 
—

 
 
—

 
 
—

 
 
3,440

 
 
0.04

net deferred tax assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As adjusted
$
(77,820
)
 
$
(88,827
)
 
$
(1.12
)
 
$
(82,557
)
 
$
(77,131
)
 
$
(0.98
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Net of reversal of restructuring liabilities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) Includes $30.5 million ($29.1 million, after tax) recorded in restructuring charges and $21.6 million ($21.0 million, after tax) recorded in cost of sales in the statement of operations for the first twenty-six weeks of 2014.



6

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