Source: Wikimedia Commons.

On March 14, shares of Aeropostale (NYSE:AROPQ) plummeted 20% after the company reported fiscal fourth-quarter revenue and earnings. Investors appear to have lost all confidence in the business, responding as though there is no future for the once high-flying retailer. But is the company's news really this foreboding, or is Mr. Market simply overreacting to what might be nothing more than a bump in the road?

Aeropostale's quarterly performance was dismal
For the quarter, Aeropostale reported revenue of $670 million. This represents a 16% drop compared to the $797.7 million reported in the year-ago quarter. It's also slightly lower than the $685 million forecast by analysts. Despite seeing a 1.5% increase in store count over the past year, the company was negatively affected by a 15% decline in comparable-store sales and the lack of an extra week in 2013 compared to 2012.

Source: Aeropostale and Yahoo! Finance.

In terms of profit, the company's metrics were even worse. For the quarter, management reported earnings per share of -$0.90. This is significantly worse than the $0.01 loss reported in the year-ago quarter.

In its press release, the company attributed the dismal profit to its falloff in sales, but also chalked up its troubles to a $21.3 million asset-impairment charge and a $20 million reserve against deferred tax assets (both net of taxes). Excluding these charges and a $2 million litigation expense, the business' net loss would have shrunk from $70.3 million to $27.1 million.  After taking into consideration these one-time expenses, the company's loss per share came in at -$0.35, $0.04 below estimates.

But how does Aeropostale stack up to others?
If you think Aeropostale is alone in its plight, you have another thing coming. During the year, the company reported a 12% drop in sales, from $2.4 billion to $2.1 billion. Other retailers that have been struggling lately include American Eagle Outfitters (NYSE:AEO), while other players like Urban Outfitters (NASDAQ:URBN) have flourished.

Over the past year, American Eagle saw its revenue fall 5%, from $3.5 billion to $3.3 billion. The primary reason for the company's lackluster sales was a 7% decline in comparable-store sales that was attributed to tough macro conditions in the retail industry. Although this is far better than Aeropostale's results, it was enough of a disappointment to send the company's shares down 4% for the day.

Where Aeropostale and American Eagle have fallen short, Urban Outfitters has benefited.  Over the past year, the company saw its revenue climb 10% from $2.8 billion to $3.1 billion.  This rise in sales over the year was due to a 6% jump in comparable Retail Segment sales, combined with a 20% increase in its comparable Wholesale Segment sales. 

In terms of profit, Aeropostale did even worse than its sales performance. For the year, the company's bottom line fell from a net gain of $34.9 million to a net loss of $141.8 million. On top of being hit by impairment charges and lower sales, the business was negatively affected by expenses that rose as a percentage of sales; management was unable to reduce costs at the same rate that revenue declined.

Although not as bad, American Eagle also experienced a profit decline that roughly mirrors Aeropostale's fall. During the year, net income fell 64%, from $232.1 million to $83 million. Similar to Aeropostale, American Eagle was harmed by declining sales, a slightly higher impairment charge than a year earlier, and costs that defied the direction of revenue.

The only winner of the bunch was Urban Outfitters. Unlike Aeropostale and American Eagle, Urban actually saw an improvement in its bottom line. As a result of higher margins in its Anthropologie brand, combined with slightly lower income tax expenses, management reported a 19% increase in net income, from $237.3 million to $282.4 million.

Foolish takeaway
Based on the data provided, it makes sense for Aeropostale to have fallen after reporting revenue and earnings that fell short of expectations. Even for its online operations, the company reported that sales fell 12%. When other retailers like American Eagle and Urban Outfitters are reporting gains in their online sales, this is an especially telling sign of how bad the company's situation has become.

Moving forward, it's difficult to tell how Aeropostale might turn its operations around, but the data released suggests that doing so will be far easier said than done. For this reason alone, the Foolish investor would be wise to analyze the company in greater depth before making an investment, and keep a watchful eye on the business' operations. Otherwise, shareholders could be in for another 20% slide.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.