Please ensure Javascript is enabled for purposes of website accessibility

It's Riches to Rags for These 2 Famous Apparel Retailers

By Motley Fool Staff - Mar 24, 2016 at 7:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Guess and Aéropostale are doing badly, but one has at least a chance to recover.

The stock price of fashion retailer Guess (GES -3.91%) fell 15% last week after the company reported poor fourth-quarter results. However, that performance isn't in the same sad league as Aéropostale's (AROPQ) hard-to-believe losing streak, in which the company has posted 13 consecutive quarterly bottom-line losses.

In this segment from the Motley Fool Money podcast, Jason Moser explains what Aéropostale has done to keep that streak alive -- or, more accurately, what it hasn't done to break it and what he sees in Guess' future.

A full transcript follows the video.

This podcast was recorded on March 18, 2016. 

Chris Hill: Shares of Guess down 15% this week after weak fourth-quarter results, but that pales in comparison to Aéropostale, which reported a loss for the 13th consecutive quarter, Jason. That and a ham sandwich will buy you shares of Aéropostale.

Jason Moser: I think I would rather just have the ham sandwich, actually, Chris. I think, with Guess, the problem Guess is facing is, basically the entire business is levered to that brand. And that brand just isn't resonating with consumers as it once did back in the early '90s or whenever Guess was bigger than it is now. I think the good news is, management has this plan to grow sales approximately $800 million over the coming three years. The bad news, I don't think it's going to happen. Again, we're looking at a business here, margins are getting killed. This has been a long, slow decline. The writing has been on the wall for a very long time with this business. And I don't see anything just turning this ship around.

Now, when we look at Aéropostale, I think Aéropostale is a great indicator of where Guess could be headed. Aéropostale ... what is there left to say? When a brand loses sway with its target market like it has, and it doesn't take the steps to try to get that target market back, I mean, that market just avoids it like the plague. I mean, you look at how outdated Aéropostale has become ... you half expect to go in there and see them selling Microsoft Zunes. So, I just don't know that you're looking at any real sort of end game here for Aéropostale. I'm not sure why those assets would be attractive for anyone. And if Guess doesn't watch out, they could find themselves in the same position a few years from now.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Aeropostale, Inc. Stock Quote
Aeropostale, Inc.
AROPQ
Guess?, Inc. Stock Quote
Guess?, Inc.
GES
$19.27 (-3.91%) $0.79

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
331%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.