FINANCE

Aeropostale to receive $150 million financing from Sycamore Partners; Q4 loss widens

BY Marianne Wilson

New York — Aeropostale on Thursday announced it has signed an agreement with private equity firm Sycamore Partners for $150 million in financing and a strategic partnership. The teen retailer also reported its fifth straight quarterly loss amid a 15% decline in same-store sales, and announced it will close 50 stores in 2014.

Sycamore will provide Aeropostale with a five-year $100 million term loan facility, and a ten-year $50 million term loan facility that includes a sourcing arrangement with MGF Sourcing, an affiliate of Sycamore.

Under the terms of the commitment letter, Aeropostale will also issue convertible preferred stock to Sycamore. The convertible stock gives Sycamore the right to acquire up to 5% of the company’s common stock at an exercise price of $7.25. Combined with Sycamore’s current ownership of Aeropostale’s outstanding common stock, the firm would own 12.3% of Aeropostale’s outstanding common stock.

As part of the agreement, Stefan Kaluzny, a managing director at Sycamore, will join Aeropostale’s board of directors on the closing of the transaction. In addition to Kaluzny, Sycamore will receive the right to appoint one additional member to the board, with a third independent appointee to be mutually agreed upon by Aeropostale and Sycamore. The board will increase from 11 to 12 members.

Thomas P. Johnson, CEO of Aeropostale, commented: "We look forward to working with Stefan and the Sycamore Partners team, and to the valuable retail and operational expertise they bring to Aeropostale. The terms of our commitment letter with Sycamore Partners are very attractive and provide us with significantly improved financial flexibility backed by their substantial knowledge of the retail industry. Once the arrangement is in place, we will have additional runway to continue to implement our merchandising, marketing and operational strategies designed to reposition the Aeropostale brand.”

Aeropostale reported a net loss of $70.3 million in the fourth quarter ended Feb. 1, wider than a loss of $671,000 in the year-ago period. Net sales fell 16% to $670 million. Same-store sales, including online sales, decreased 15%.

Net sales for fiscal 2013 decreased 12% to $2.091 billion. Same-store sales, including the e-commerce channel, decreased 15%.

Aeropostale said it plans to close about 50 Aeropostale stores and two P.S. stores in 2014. It has retained a real estate consulting firm to advise on accelerating the pace of closures, and to identify other rent-saving actions.

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FINANCE

NRF: Retail sales rebound in February

BY Dan Berthiaume

Washington, D.C. – Lingering bad weather in much of the country did not keep consumers from shopping during February 2014. According to the National Retail Federation (NRF), February 2014 retail sales, which exclude automobiles, gas stations and restaurants, increased 0.2% adjusted month-to-month and 2.3% unadjusted year-over-year.

February retail sales results released by the U.S. Census Bureau, which include categories such as automobiles, gasoline stations, and restaurants, increased 0.3% seasonally adjusted month-to-month ($472.2 billion). The Census also reported that retail sales increased 1.5% adjusted year-over-year.

Additional NRF findings from the February retail sales report include:

• Building material and garden equipment and supplies dealers stores’ sales increased 0.3% seasonally adjusted month-to-month and 3.2% unadjusted year-over-year.

• Clothing and clothing accessories stores’ sales increased 0.4% seasonally adjusted month-to-month and 2.4% unadjusted year-over-year.

• Electronics and appliance stores’ sales decreased 0.2% seasonally adjusted month-to-month and 2.3% unadjusted year-over-year.

• Furniture and home furnishing stores’ sales increased 0.4% seasonally adjusted month-to-month and unchanged unadjusted year-over-year.

• General merchandise stores’ sales decreased 0.3% seasonally-adjusted month-to-month and 0.9% unadjusted year-over-year.

• Health and personal care stores’ sales increased 1.2% seasonally adjusted month-to-month and 5.6% unadjusted year-over-year.

• Nonstore retailers’ sales increased 1.2% seasonally adjusted month-to-month and 6.8% unadjusted year-over-year.

• Sporting goods, hobby, book and music stores’ sales increased 2.5% seasonally adjusted month-to-month yet decreased 5.3% unadjusted year-over-year.

“Today’s positive retail sales report indicates that the economy is primed for growth,” NRF president and CEO Matthew Shay said. “Retailers and consumers endured the harsh winter and they’re hoping both the natural and man-made obstacles to growth will leave with the snow.”

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FINANCE

Williams-Sonoma Q4 tops estimates as online surges 11.5%; ups dividend

BY Marianne Wilson

San Francisco — Williams-Sonoma reported a better-than-expected profit of $133.8 million in the fourth quarter, up slightly from $133.7 million in the year-ago period. The company also announced it is lifting its dividend 2 cents, or 6%, to 33 cents a share.

“Williams-Sonoma, Inc. outperformed the retail industry this holiday season, gaining market share and demonstrating the structural advantage of our multi-brand, multichannel platform,” said Laura Alber, president and CEO. “The strength of our brands across retail and e-commerce, in conjunction with disciplined execution, enabled our team to drive record operating results.”

Revenue for the quarter, which ended February 2, 2014, and had one less week than last year, rose 4.3% to $1.47 billion. Online sales surged 11.5% to $706.4 million. (E-commerce represented 44% of the company’s net revenues in fiscal 2013.)

“Our multichannel marketing, built from decades of data analytics experience, enables us to reach our customers and attract new ones in increasingly relevant ways,” Alber said.

Total same-store sales in the fourth quarter increased 10.4%. By brand, West Elm was on top, with 18.3% growth, while Pottery Barn’s sales were up 14.6%. Williams-Sonoma’s namesake stores posted a 2.3% increase. Pottery Barn Kids and PBteen were up 11.2% and 9.6%, respectively.

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