• Q1 adjusted net loss US$41.1m, up from $12.2m
  • Net sales down 12% to $395.9m
  • Analyst highlights “consistently poor” merchandise

Teen apparel retailer Aeropostale suffered from weak retail traffic and “significant self-inflicted merchandise misses” in the first quarter, sending losses soaring.

E-commerce revenues dipped by 18% to US$34.3m, the US company said, leaving comparable store sales down 13% in the period.

The poor performance led analyst RBC Capital Markets to downgrade its rating to Sector Perform, while Stifel reiterated its Hold recommendation.

“As other retailers experienced, the macroeconomic environment was challenging during the first quarter, with aggressive promotions, lower mall traffic and unseasonable weather,” said Aeropostale CEO Thomas Johnson.

“While our overall results were disappointing, we were able to exceed guidance and end the quarter with inventories well-controlled.”

The company closed 18 Aeropostale stores during the period, as well as one PS from Aeropostale outlet.

Meanwhile, talks are continuing with private equity firm Sycamore Partners to secure credit of $150m in return for an equity stake in the retailer.

RBC Capital Partners said of the company: “While we continue to agree with management’s many efforts and strategies to improve business trends, the turnaround is taking significantly longer than we expected.

“In addition, their progress is being hampered by difficult business conditions in the teen space, overall.”

Stifel also highlighted Aeropostale’s “significant self-inflicted merchandise misses”, but backed the broad thrust of the company’s new strategy.

“However, given the company’s consistent poor merchandise offerings over the past several years, we believe it will take time for Aeropostale to win back its customers, despite an improved fashion assortment,” the analyst added.