Aeropostale to close 125 mall-based P.S. stores; cut 100 jobs

New York -- Aeropostale Inc. will close approximately 125 of its mall-based P.S. from Aeropostale kids’ stores by the end of its fiscal year and cut about 100 corporate jobs as part of a larger turnaround effort.

Aeropostale plans to restructure the children’s brand to focus on faster growing sales channels, including off-mall locations such as outlets, e-commerce, and international licensing. It is also exploring other potential third party distribution channels. The company said it expects the move to eliminate pre-tax losses of approximately $15 million that were generated in the mall-based business in fiscal 2013, excluding any impairment charges.

The retailer also unveiled a cost-cutting plan targeting direct and indirect spending across the company, including plans to reduce corporate headcount by about 100 positions.

“The steps we are announcing today build on our turnaround efforts from the past year," said Thomas P. Johnson, CEO of Aeropostale. "Through the restructuring of our P.S. from Aeropostale brand, and expansion of our expense savings program, we will be better positioned financially and have laid the groundwork for the future."

Aeropostale estimates that the moves will result in one-time charges of approximately $40 million to $65 million during fiscal 2014, with as much as $40 million in the form of cash expenses.  

The retailer estimates the changes will generate approximately $30 million to $35 million in annualized pre-tax savings, of which approximately $5 million to $10 million is expected to be achieved in fiscal 2014.

In line with prior guidance, Aeropostale continues to expect first quarter 2014 operating losses in the range of $64 million to $68 million, which translates to a net loss in the range of $0.70 to $0.75 per diluted share.

Aeropostale reported its fifth consecutive quarterly loss in March.

 

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