Aeropostale, the high-flying specialty chain for young men and women, logged hefty increases in profits, sales and margins in the fourth quarter.

Reporting after the close of the markets Thursday (15 March), the New York-based retailer posted net income of US$57.3m, or $1.08 per diluted share, for the three months ended 3 February, 37% ahead of the $41.8m, or $0.76, tallied during the final quarter of 2005. Excluding extraordinary items, EPS was $1.00, 1 cent above consensus estimates.

Net sales were up 16.5% to $506.8m during the more recent 14-week quarter versus $435.2m in the 13-week year-ago period. Same-store sales rose 2.2% from the comparable 14 weeks of 2005.

Gross margin accelerated to 37% of sales from 33.5% in the year-ago period.

"We regained balance in our merchandise assortment, delivered excitement with our brand building initiatives and improved our planning processes," said Julian Geiger, chairman and chief executive officer.

"As a result, we achieved double-digit annual sales growth and earnings per share growth in excess of 25% over the previous year.

"We ended the year with strong momentum and we believe that the Aeropostale brand is recognised, respected and effectively positioned for a strong 2007."

Aeropostale expects earnings per diluted share of $0.19 to $0.21 during the first quarter, up from $0.15 in last year's comparable period. For the full year, the company is project EPS growth of approximately 20%, placing guidance at about $2.26.

The firm ended 2006 with 728 Aeropostale units and 14 stores operating under the Jimmy'Z banner. Approximately 85 Aeropostale stores, including the first 10 stores in Canada, are slated for the new fiscal year.

Net income for the full year reached $106.6m, or $1.98 a diluted share, 27% above last year's mark of $84m, or $1.50. One-time gains added $0.10 to 2006 EPS. Net sales were up 17.4% to $1.41bn from $1.20bn. Same-store sales rose 2%.

Directors of Aeropostale added $100m to its share repurchase programme, lifting the balance available for stock buys to $150m.
By Arnold J Karr.