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Aéropostale exiting malls with youth format

Teen specialist Aéropostale lent credence to the “malls are dying” voices by announcing the closure of 125-mall based stores and the elimination of 100 headquarter positions.

Citing changing shopping patterns among moms, Aéropostale said it planned to close 125 of its 150 P.S. from Aéropostale stores which focus on kids ages four through 12. The move is part of a larger cost reduction program related to a turnaround strategy that is expected to result in annual savings of $30 to $35 million.

The closures aren’t a big surprise as the company has struggled of late and previously alluded to the likelihood of store closures. Aéropostale reported a $70 million loss and a 15% same store sale decline in the fourth quarter. The company also said it had closed 32 Aéropostale stores during the period, planned an additional 50 closures this year and secured a new $150 million credit facility with Sycamore Partners.

"The steps we are announcing today build on our turnaround efforts from the past year," Aéropostale CEO Thomas P. Johnson said on April 30 when the P.S. closures and headcount reductions were announced. "Through the restructuring of our P.S. from Aéropostale brand, and expansion of our expense savings program, we will be better positioned financially and have laid the groundwork for the future. In addition to today's steps, our transaction with Sycamore Partners continues to proceed as planned, and will also provide additional runway to continue to implement our merchandising, marketing, and operational strategies designed to reposition the Aéropostale brand."

That repositioning involves less of an emphasis on malls, especially for the P.S. brand focused on younger customers, because consumer shopping patterns among moms have changed, according to the company. Plans call for a restructuring of the P.S. brand to focus on faster growing sales channels, including off-mall locations such as outlets, e-commerce and international licensing. The company also said it is exploring potential third party distribution channels. The combined steps are expected to eliminate pre-tax losses of approximately $15 million that were generated in the mall-based business last year.

The company operates 931 Aéropostale stores in the U.S. and Canada and its licensees operate an addition 117 locations worldwide.
 

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