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Aeropostale Reports Results For Third Quarter Of Fiscal 2012

Third Quarter Earnings of $0.31 Per Diluted Share

NEW YORK, Nov. 28, 2012 /PRNewswire/ -- Aeropostale, Inc. (NYSE: ARO), a mall-based specialty retailer of casual apparel for young women and men, today reported results for the third quarter of fiscal 2012, and provided guidance for the fourth quarter of fiscal 2012.

Third Quarter Performance
Diluted net earnings for the third quarter of 2012 were $0.31 per share, compared to $0.30 per diluted share in the same period last year.  Net income for the third quarter of 2012 was $24.9 million, compared to net income of $24.1 million last year. 

For the third quarter of fiscal 2012, net sales increased 2% to $605.9 million, from $596.5 million in the year ago period. Comparable sales, including the e-commerce channel, for the third quarter decreased 1% compared to a 7% decrease last year.  Comparable store sales, excluding the e-commerce channel, for the third quarter decreased 2%, compared to a 9% decrease last year. 

Thomas P. Johnson, Chief Executive Officer, commented, "For the third quarter, we achieved net earnings slightly ahead of our previously issued guidance. Although we experienced pressure on our women's core basics business, she responded positively to our fashion offering.  In addition, our men's and accessories businesses performed well."

E-commerce
Net revenue from the Company's e-commerce business for the third quarter of fiscal 2012 increased 12% to $51.1 million, from $45.7 million in the year ago period. 

Cash Position and Share Repurchase Program
The Company ended the quarter with cash and cash equivalents of $184.5 million and no debt. During the third quarter of fiscal 2012, the Company repurchased approximately $40.8 million, or 3.0 million shares of common stock.  The Company currently has $104.4 million of availability remaining under its share repurchase program.

Store Growth and Capital Spending
The Company opened five Aeropostale and five P.S. from Aeropostale stores, and closed two Aeropostale and two temporary P.S. from Aeropostale stores during the quarter. For the third quarter, the Company invested $15.9 million in planned capital expenditures.

Fourth Quarter Guidance
The Company announced earnings guidance for the fourth quarter of fiscal 2012.  The Company expects adjusted earnings in the range of $0.36 to $0.41 per diluted share, compared to adjusted earnings of $0.44 per diluted share in the same period last year. This earnings guidance does not include the impact of any potential store asset impairment charges, and assumes an effective tax rate of approximately 43.5% versus a tax rate of 35.9% last year.

Mr. Johnson continued, "While our performance over the Black Friday weekend was encouraging, the environment during the first few weeks of November was challenging.  As a result, we continue to be cautious for the remainder of the quarter given the inconsistency we are seeing in our business against the backdrop of a highly promotional environment. We will continue to focus on delivering on our strategic initiatives, managing our business conservatively, and ending the quarter with inventories well-controlled."

Use of Non-GAAP Measures
The Company believes that the disclosure of adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures, provides investors with useful information to help them better understand the Company's results (see Exhibit D).

Conference Call Information
The Company will be holding a conference call today at 4:15 P.M EST to review its third quarter results. The broadcast will be available through the 'Investor Relations' link at www.aeropostale.com and www.fulldisclosure.com.  To listen to the broadcast your computer must have Windows Media Player installed. If you do not have Windows Media Player go to the latter site prior to the call, where you can download the software for free.

About Aeropostale, Inc.
Aeropostale®, Inc. is a primarily 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 4 to 12 year-old kids through its P.S. from Aeropostale® stores. The Company provides customers with a focused selection of high quality fashion and fashion basics at compelling values in an innovative and exciting store environment. Aeropostale® maintains control over its proprietary brands by designing, sourcing, marketing and selling all of its own merchandise. Aeropostale® products can only be purchased in Aeropostale® stores and online at www.aeropostale.com. P.S. from Aeropostale® products can be purchased in P.S. from Aeropostale® stores and online at www.ps4u.com and www.aeropostale.com. The Company currently operates 916 Aeropostale® stores in 50 states and Puerto Rico, 78 Aeropostale stores in Canada and 99 P.S. from Aeropostale® stores in 20 states. In addition, pursuant to various licensing agreements, our licensees currently operate 28 Aeropostale® and P.S. from Aeropostale® stores in the Middle East, Asia and Europe.  On November 13, 2012, Aeropostale, Inc. acquired substantially all of the assets of online women's fashion footwear and apparel retailer GoJane.com, Inc. Based in Ontario, California, GoJane focuses primarily on fashion footwear, with a select offering of contemporary apparel and other accessories.

SPECIAL NOTE: THIS PRESS RELEASE AND ORAL STATEMENTS MADE FROM TIME TO TIME BY REPRESENTATIVES OF THE COMPANY CONTAIN CERTAIN "FORWARD-LOOKING STATEMENTS" CONCERNING EXPECTATIONS FOR SALES, STORE OPENINGS, GROSS MARGINS, EXPENSES, STRATEGIC DIRECTION AND EARNINGS.  ACTUAL RESULTS MIGHT DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER INCLUDE, CHANGES IN THE COMPETITIVE MARKETPLACE, INCLUDING THE INTRODUCTION OF NEW PRODUCTS OR PRICING CHANGES BY OUR COMPETITORS, CHANGES IN THE ECONOMY AND OTHER EVENTS LEADING TO A REDUCTION IN DISCRETIONARY CONSUMER SPENDING; SEASONALITY; RISKS ASSOCIATED WITH CHANGES IN SOCIAL, POLITICAL, ECONOMIC AND OTHER CONDITIONS AND THE POSSIBLE ADVERSE IMPACT OF CHANGES IN IMPORT RESTRICTIONS; RISKS ASSOCIATED WITH UNCERTAINTY RELATING TO THE COMPANY'S ABILITY TO IMPLEMENT ITS GROWTH STRATEGIES, AS WELL AS THE OTHER RISK FACTORS SET FORTH IN THE COMPANY'S FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS OR CIRCUMSTANCES.

EXHIBIT A


















AEROPOSTALE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 (In thousands)

(Unaudited)












October 27, 2012



January 28, 2012



October 29, 2011

ASSETS









Current Assets:









  Cash and cash equivalents 

$

184,456


$

223,712


$

109,379

  Merchandise inventory 


277,440



163,522



265,133

  Other current assets 


64,578



54,565



67,500

     Total current assets 


526,474



441,799



442,012










Fixtures, equipment and improvements, net 


298,915



287,393



313,483










Other assets 


4,057



6,041



5,830










TOTAL ASSETS 

$

829,446


$

735,233


$

761,325










LIABILITIES AND STOCKHOLDERS' EQUITY









Current Liabilities:









  Accounts payable 

$

178,523


$

103,476


$

171,592

  Accrued expenses 


107,377



89,735



77,701

     Total current liabilities 


285,900



193,211



249,293










Other non-current liabilities 


134,752



132,588



129,834










Stockholders' equity 


408,794



409,434



382,198










TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$

829,446


$

735,233


$

761,325










EXHIBIT B




















AEROPOSTALE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

SELECTED STORE DATA

 (In thousands, except per share and store data)

(Unaudited)













13 weeks ended



October 27, 2012



October 29, 2011





% of sales





% of sales

Net sales  

$

605,918


100.0%


$

596,506


100.0%











Cost of sales (including certain buying, occupancy and warehousing expenses) 


436,911


72.1%



434,985


72.9%











Gross profit 


169,007


27.9%



161,521


27.1%











Selling, general and administrative expenses  


126,514


20.9%



121,793


20.4%











Income from operations  


42,493


7.0%



39,728


6.7%











Interest expense, net 


39


0.0%



185


0.0%











Income before income taxes 


42,454


7.0%



39,543


6.7%











Income taxes 


17,507


2.9%



15,435


2.7%











Net income 

$

24,947


4.1%


$

24,108


4.0%











Basic earnings per share 

$

0.31




$

0.30













Diluted earnings per share 

$

0.31




$

0.30













Weighted average basic shares 


79,833





80,741













Weighted average diluted shares 


80,136





81,068













STORE DATA:




















Comparable sales change (including e-commerce channel) 


-1%





-7%













Comparable store sales change (excluding e-commerce channel) 


-2%





-9%













Stores open at end of period 


1,091





1,055













Total square footage at end of period 


4,033,820





3,886,083













Average square footage during period 


4,027,337





3,862,152













EXHIBIT C




















AEROPOSTALE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

SELECTED STORE DATA

 (In thousands, except per share and store data)

(Unaudited)













39 weeks ended



October 27, 2012



October 29, 2011





% of sales





% of sales

Net sales  

$

1,588,469


100.0%


$

1,533,880


100.0%











Cost of sales (including certain buying, occupancy and warehousing expenses) 


1,157,680


72.9%



1,121,666


73.1%











Gross profit 


430,789


27.1%



412,214


26.9%











Selling, general and administrative expenses  


371,012


23.4%



339,524


22.1%











Income from operations  


59,777


3.7%



72,690


4.7%











Interest expense, net 


346


0.0%



300


0.0%











Income before income taxes 


59,431


3.7%



72,390


4.7%











Income taxes 


23,837


1.5%



28,974


1.9%











Net income 

$

35,594


2.2%


$

43,416


2.8%











Basic earnings per share 

$

0.44




$

0.53













Diluted earnings per share 

$

0.44




$

0.53













Weighted average basic shares 


80,714





81,358













Weighted average diluted shares 


81,157





81,924













STORE DATA:




















Comparable sales change (including e-commerce channel) 


1%





-8%













Comparable store sales change (excluding e-commerce channel) 


-1%





-10%













Average square footage during period 


3,981,670





3,806,693













EXHIBIT D
























AEROPOSTALE, INC.

RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE

(In thousands, except per share data)

(Unaudited)

























The following table presents a reconciliation of net income and diluted earnings per share ("EPS") on a GAAP basis to the non-GAAP adjusted basis discussed in this release.  



























39 weeks ended



October 27, 2012



October 29, 2011



Net Income



Diluted EPS



Net Income



Diluted EPS













As reported  

$

35,594


$

0.44


$

43,416


$

0.53













Vendor dispute resolution1  


-



-



(4,700)



(0.06)













As adjusted  

$

35,594


$

0.44


$

38,716


$

0.47





































1During the second quarter of 2011, we recorded a favorable pre-tax benefit of $8.7 million, resulting from the resolution of a previously disclosed dispute with one of our sourcing agents.  Of this benefit, $8.0 million related to periods prior to fiscal 2011.  













Company Contact:
Kenneth Ohashi/VP, Investor & Media Relations
(646) 452-1876 or [email protected]

Media Contact:
Leigh Parrish, FTI Consulting
(212) 850-5651

SOURCE Aeropostale, Inc.

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