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What: Shares of teen apparel retailer Aeropostale (NYSE: ARO ) plummeted 32% today after its same-store sales and quarterly guidance disappointed Wall Street.
So what: Aeropostale shares have performed nicely over the past year, but downbeat guidance for the second quarter -- prompted by flat same-store sales -- is forcing Mr. Market to sober up considerably. In fact, the weak outlook comes just after close rival Abercrombie & Fitch (NYSE: ANF ) also issued a disappointing full-year forecast, suggesting that the teen apparel space is becoming particularly susceptible to slowing consumer spending.
Now what: Management now expects to break even in the second quarter, down from its prior EPS view of $0.03-$0.05. "We are clearly disappointed that our second-quarter results fell below our initial expectations," CEO Thomas Johnson said. "While we delivered a more cohesive fashion offering and continued to improve our sales per transactions, our overall store traffic was weaker than anticipated." Of course, when you consider Aeropostale's single-digit forward P/E, much of that bad news might already be discounted into the shares.
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