Aeropostale expands brand to Mexico

Jan. 17, 2013

By Anna Prior 

Aeropostale Inc. ARO +3.14% is the latest teen retailer to head south of the border, announcing at the ICR XChange conference Thursday that it has struck a deal to bring its brand to Mexico. 

Aeropostale is working with department-store operator El Puerto de Liverpool SAB de CV and will have branded shops within every Liverpool department store, as well as separate standalone stores operated through Liverpool, Aeropostale Chief Financial Officer Marc Miller said. 

"They are licensing partners, so they take on all the capital risk and inventory risk," Mr. Miller said. The company said it expects this deal, along with the whole international segment, to contribute seven cents toward earnings per share in the fiscal year ending next January. 

While Mr. Miller didn't elaborate on a time line or total number of locations, Liverpool currently operates 70 namesake department stores and 23 stores under its Fabricas de Francia brand, according to its website.

Rival American Eagle Outfitters Inc. (AEO) announced last year that it will enter Mexico with six stores this year. 

Aeropostale, which operates children's and teen retail chains, has mostly posted weaker profits as its girls' business failed to resonate with shoppers and it faced increased competition from others in the teen sector, including higher-end Abercrombie & Fitch Co. (ANF), which became more promotional, especially with its Hollister brand. 

Thursday's presentation focused on how Aeropostale plans to reconnect with its female customers, by shifting the focus in stores to head-to-toed fashion outfits instead of basic T-shirts and hooded sweatshirts, and reaching out via social media. 

"We want to further tie our brand changes back to the teen consumer, in a way that really resonates with her lifestyle," Mr. Miller said. 

The company recently cut its earnings guidance for the fiscal fourth quarter, after it posted lower-than-expected sales and margins during the critical holiday period. 

Aeropostale shares recently rose 2.2% to $13.31. The stock is down 19% over the last 12 months.