Aéropostale Beats on Both Top and Bottom Lines

Aéropostale (NYSE: ARO  ) reported earnings on March 14. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Feb. 2 (Q4), Aéropostale beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank slightly. Non-GAAP earnings per share contracted significantly. GAAP earnings per share dropped to a loss.

Margins shrank across the board.

Revenue details
Aéropostale booked revenue of $797.7 million. The 21 analysts polled by S&P Capital IQ expected a top line of $779.8 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.24. The 22 earnings estimates compiled by S&P Capital IQ predicted $0.22 per share. Non-GAAP EPS of $0.24 for Q4 were 45% lower than the prior-year quarter's $0.44 per share. GAAP EPS were -$0.01 for Q4 versus $0.32 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 19.9%, much worse than the prior-year quarter. Operating margin was 0.0%, 700 basis points worse than the prior-year quarter. Net margin was -0.1%, 330 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $451.8 million. On the bottom line, the average EPS estimate is -$0.16.

Next year's average estimate for revenue is $2.39 billion. The average EPS estimate is $0.58.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 917 members out of 987 rating the stock outperform, and 70 members rating it underperform. Among 271 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 260 give Aéropostale a green thumbs-up, and 11 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Aéropostale is hold, with an average price target of $15.00.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Aeropostale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On March 16, 2013, at 3:31 PM, rsinj wrote:

    And by the market's reaction to ARO earnings, you can see how important beating analyst estimates is these days...not important at all.

    ARO is in serious trouble. I couldn't believe the ridiculous headlines the couple days before they announced telling investors to buy shares in advance of the announcement. And what did the naive investors do...they bought and drove the price up. This is a clear indication that we have a bubble on our hands - put out an article telling investors to buy when there is no good news, everyone knows there's no good news, the stock was already trading 20% above the lows of a couple months ago for no reason, and here's these bozos going and buying shares because some talking head told them to. Hilarious and pathetic at the same time.

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