Few retailers have as much riding on back-to-school shopping as ailing Aeropostale

Fashion woes.
Fashion woes.
Image: Reuters/Rick Wilking
By
We may earn a commission from links on this page.

Teen retailer Aeropostale is falling out of fashion, both among shoppers and investors. 

After losing around three-quarters of its value so far this year, the company’s stock price dropped below $1 earlier this month. Yesterday (Sept. 29), the New York Stock Exchange warned that the company has six months to boost the price to the exchange’s $1 a share minimum, or be delisted. 

Aeropostale plans to respond soon with a plan to get its stock back on track. The simplest fix is a reverse stock split—after all, the company has struggled mightily to generate the profits and growth that would convince investors to re-rate the retailer’s valuation.

The mall-based chain posted its 11th consecutive quarterly loss last month, pummeled by the combination of declining mall traffic and the rise of fast-fashion outlets like Zara and H&M. The arrival of Primark on American shores is also an ominous development for executives at Aeropostale’s New York headquarters.

Aeropostale been slower than its peers to change with the times. While American Eagle Outfitters and Abercrombie & Fitch have made strategic changes to their styles and marketing approach in recent years—American Eagle has beefed up its multichannel options and Abercrombie has de-emphasized logo-heavy designs and hunky salesmen—Aeropostale hasn’t been nearly as decisive. It is still deciding whether to focus on e-commerce or physical storefronts, which has led to declines on both fronts.

Aeropostale’s latest quarterly loss was down to the heavy discounting of unsold stock and closure of unprofitable stores. This, CEO Julian Geiger said, cleared the slate for a big push with new, trendier clothing for the current back-to-school season. This is a crucial period for any youth-focused retailer, but for Aeropostale this year it could be make or break.