Aeropostale (NASDAQOTH:AROPQ) is expected to report third quarter results on December 4.  The retailer produces casual apparel mainly targeted at a teen audience but has suffered from weak traffic this year. Second quarter comparable sales were down 15% year over year,which suggests that Aeropostale's styles have joined competitor Abercrombie & Fitch (NYSE:ANF) in falling out of trend. 

Will the third quarter provide more optimistic results? Here's what to look for in the earnings report. 

Quarter estimates to beat
Analysts predict third quarter revenue of $519 million and a loss per share of $0.24. Aeropostale has met or beat revenue estimates for the past five quarters but missed on earnings per share for the past three quarters.  The company expects a loss per share between $0.21 and $0.26. 

Investors and analysts will compare this years' third-quarter results to the prior year's period. During the third quarter of its last Aeropostale had reported revenue of $606 million and EPS of $0.31. 

Improving on the quarter requires Aeropostale to beat the second-quarter report, which featured $454 million in revenue and a $0.36 adjusted loss per share. Comparable sales including e-commerce were down 15 percent compared to a flat performance in the prior year's period. 

Competitor performance
It was a rough quarter in general for retailers -- particularly those that target younger demographics that possess less disposable income. As we shall see in results from competitors that have already been reported, times are even tougher for retailers that mainly stock preppy inventory that clearly bears a company's logo. 

Abercrombie & Fitch reported third quarter earnings last week. Analysts had estimated revenue of $1.1 billion and EPS of $0.44. Abercrombie reported revenue of $1 billion and a net loss of $0.20. 

Total comparable-store sales were down 14% but that figure was propped up by the strength of the direct-to-consumer segment, which had 11% comps growth. Hollister Co. stores saw the steepest decline in revenues which came in at 16% with the namesake stores following closely behind with a 14% comps drop. 

Compare Abercrombie's performance to Urban Outfitters (NASDAQ:URBN), which beat its estimates for the third quarter. Urban's namesake stores reported weaker comps with a third quarter drop of 1%. The company's higher-end brands Free People and Anthropologie reported comps up 30% and 13%, respectively. 

Urban Outfitters stocks a vastly different inventory from Abercrombie and Aeropostale, favoring more bohemian and trend-focused pieces that tend not to have logo text anywhere on the clothing. 

Foolish final thoughts
Expect to see the comps slide continue in Aeropostale's third quarter. Urban Outfitters' smaller comps drop at its namesake stores show that Urban's approach appeals more to shoppers than those of Aeropostale and Abercrombie. That being said, the entire subsector of teen retailers is experiencing strong headwinds and will continue to do so until the broad economy improves. All of these factors will likely make for a rough earnings report on Wednesday December 4 for Aeropostale. 


Brandy Betz has no position in any stocks mentioned. The Motley Fool recommends Urban Outfitters. 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.