Aeropostale will cut its headcount by 13%

Aeropostale will cut its headcount by 13%

US teen apparel retailer Aeropostale is to implement an "aggressive" new cost reduction programme that will result in the loss of 100 jobs as it looks to return to profitability. 

The retail group, which has reported two consecutive years of losses, said it will cut its corporate headcount by 13% by the end of fiscal 2015, with a target of achieving US$35m to $40m per year in savings before taxes.

The new programme, which reiterates its fourth-quarter guidance, will target both direct and indirect spending across the organisation. 

"The decisions that led to today's actions are a result of our focus on Aeropostale's future, and our goal of returning to profitability," said CEO Julian Geiger. 

The company said it continues to expect operating losses in the range of $0.0m to $10m, which translates to a net loss in the range of $0.04 to $0.17 per diluted share. This does not include the impact of the headcount reductions, store impairments, store closure costs or real estate consulting fees.

"The reiteration of our fourth quarter guidance demonstrates sequential improvement from a sales and operating loss perspective," he added. "We are building upon areas of progress and continue to work to improve our business. We look forward to discussing our plans for 2016 on our next earnings call."

Additionally, Geiger said he was voluntarily relinquishing one million stock options, which Aéropostale plans to use to retain key members of staff.

Stifel analyst, Richard Jaffe, noted: "While the company is playing good defence by cutting expenses, closing underperforming stores, focusing growth on accretive channels (international and e-commerce), results remain weak as we question whether the Aéropostale brand remains relevant to today's teenager."