US: Aeropostale in financing deal as Q4 loss widens
- Q4 net loss widens to US$70.3m
- Net sales drop 16% to $670m
- Signs strategic partnership with Sycamore Partners
Sales dropped 16% to $670m during the fourth quarter
Hopes of a turnaround at Aeropostale seem to be some way off after the struggling teen apparel retailer said its performance in 2013 was "not acceptable" after it widened its net loss in the fourth-quarter.
In the three months ended 1 February, the company recorded a net loss of US$70.3m compared to a loss of $0.7m a year earlier. Earnings were hit by one-off charges of $43.3m.
Net sales dropped 16% to $670m, from $797.7m in the year ago quarter. Comparable sales, including the e-commerce channel, were down 15%. Sales from the company's e-commerce business dropped 12% to $85.6m.
Aeropostale separately said it has signed a deal with Sycamore Partners for $150m in loans and a sourcing arrangement with MGF Sourcing, an affiliate of Sycamore Partners. The private equity firm will also have the right to buy a stake of up to 5% in the retailer.
"We are moving aggressively and taking swift actions across all areas of our business that we expect will improve our operational and financial performance over time," said CEO Thomas Johnson.
"The commitment letter for a strategic partnership and financing that we announced today more strongly positions the company and provides us with the flexibility to continue executing on our strategies designed to reposition the Aeropostale brand."
FBR & Co analyst Susan Anderson said: "While Aeropostale has taken some steps to turn around the business, we think that any potential turnaround is a way off and significant execution risk is present, and we would remain on the sidelines until there is evidence that initiatives are working."
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