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Q2 profit shrinks; Q3 will be challenging, Aeropostale
Aug '11
Aeropostale Inc, a mall-based specialty retailer of casual apparel for young women and men, reported results for the second quarter of fiscal 2011, and provided guidance for the third quarter of fiscal 2011.

Second Quarter Performance
Diluted net earnings per share for the second quarter were $0.04 per diluted share, which included a non-recurring pre-tax benefit to the Company's gross profit of $8.7 million, or $0.06 per diluted share, resulting from the resolution of a dispute with one of the Company's merchandise vendors, surrounding prior period allowances. The Company reported net earnings of $0.46 per diluted share in the second quarter last year.

For the second quarter of fiscal 2011 net sales decreased 5% to $468.2 million, from $494.7 million in the year ago period. Same store sales for the second quarter decreased 14%, compared to a same store sales increase of 4% last year. Year to date net sales decreased 2% to $937.4 million, from $958.3 million in the year ago period. Year to date, same store sales decreased 10%, compared to a same store sales increase of 5% in the year ago period.

Total net sales from the Company's e-commerce business for the second quarter of fiscal 2011 increased 20% to $25.1 million, from $20.9 million in the year ago period.

Cash Positioning and Share Repurchase Program
The Company ended the quarter with cash and cash equivalents of $73.1 million, and no debt. The Company currently has $145.2 million of availability remaining under its share repurchase program.

Store Growth and Capital Spending
The company opened 7 Aeropostale and 10 P.S. from Aeropostale stores, and closed 2 Aeropostale stores during the quarter. For the second quarter the company incurred $21.1 million in capital expenditures.

Third Quarter Guidance
For the third quarter of fiscal 2011, the Company expects net earnings in the range of $0.09 to $0.15 per diluted share, compared to net earnings of $0.63 per diluted share in the same period last year.

Thomas P. Johnson, Chief Executive Officer, commented, "Our outlook for the third quarter reflects challenging sales and margin trends, as well as an uncertain macroeconomic environment. While we are very disappointed with our current performance, we are working diligently to integrate the right balance of fashion into our assortment. Additionally, we will find new ways to connect with our customer, and amplify our fashion message. I am very confident that the strategies we have in place and the tenacity of our organization will position us for future growth and success."

Aeropostale Inc is a mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aeropostale stores and 7 to 12 year-old kids through its P.S. from Aeropostale stores. The Company provides customers with a focused selection of high-quality, active-oriented, fashion and fashion basic merchandise at compelling values. Aeropostale maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise.

Aeropostale Inc

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