Aéropostale has received final approval from a U.S. bankruptcy court to procure $160 million in debtor-in-possession (DIP) financing from Crystal Financial LLC. With the financing, the retailer expects to begin a restructuring process and emerge from Chapter 11 bankruptcy during Q3 2016.
Aéropostale filed for bankruptcy in May 2016, becoming the latest teen retailer to experience the pitfalls that come with decreasing sales and store traffic. While the retailer will close 113 U.S. stores and all of its 41 Canada locations as part of its reorganization, the liquidation does bring a new opportunity for the brand to cater to Gen Z consumers.
Similar to teen-oriented retail competitors American Eagle Outfitters and Abercrombie & Fitch, Aéropostale will now have to shift gears if it wants to thrive in its next phase. The reduction in stores may actually be the first step in the right direction for the retailer, as long as it has a plan for the remaining locations beyond simply selling merchandise.
In an official statement upon filing for bankruptcy, the retailer did indicate that it would undergo a “merchandise repositioning.” There has been no official confirmation of what this repositioning entails, or to what extent the retailer’s offerings will change, but one could reasonably assume that the goal of a leaner operation will be accomplished with a slimmer inventory distribution. With younger consumers placing more of their attention outside of the actual purchase process, the leaner store footprint would benefit from the added value of more experience-based features.
Smaller inventories and a tighter distribution network can also help the retailer’s speed and responsiveness. Fast fashion apparel brands are succeeding with younger audiences by providing value via a quick turnaround of merchandise and relatively cheap pricing strategies. Aéropostale may want to expedite the movement of popular apparel to the storefront and e-Commerce site to catch up.
Considering that luxury brands such as Burberry, Tom Ford and Nordstrom have established their own entry into fast fashion, it’s not unreasonable to believe that a modern teen retailer in need of a brand repositioning would consider this route, especially when traditional concepts have faltered.