The logos that teens once flaunted proudly on their clothes are now becoming scarlet letters. As a result, once-reigning teen retailers, such as Aeropostale, are fighting to maintain customer loyalty as their sales continue to plummet.
Aeropostale’s net sales for Q2 2014 decreased 13% year over year from $450 million to $396.2 million. The company has projected a Q2 operating loss up to $64 million and a net loss of approximately $0.80 to $0.83 per diluted share. To offset recent losses, Aeropostale has closed 125 of its P.S. kids’ clothing stores, cut jobs at its corporate headquarters, and shuttered 50 Aeropostale stores.
In light of these pressures, Aeropostale announced that Thomas P. Johnson has stepped down from his position as CEO of the mall-based teen retailer as it faces an ongoing period of decline. Former CEO Julian R. Geiger has rejoined the company as Johnson’s successor to try and turn the company around.
“Julian’s previous service in the role of CEO combined with his passion for the Aeropostale brand make him an ideal choice to lead this organization,” said Karin Hirtler-Garvey, Chairperson of Aeropostale’s Board of Directors. “Julian was the leader of Aeropostale’s strategic direction during a period of significant growth, and we are confident in his enthusiasm for the business, his understanding of today’s teen retail marketplace and his intuition regarding teen fashion.”
However, the success that Aeropostale once enjoyed from being marketed as a cost-effective alternative to preppy, branded apparel can no longer support the company. Johnson attributes falling sales to a “seismic shift” in the teen apparel market away from logos. He added that “what has historically made us successful — logo and price alone — are not the keys to success in the future.”
Despite shifting preferences among the Aeropostale target market, Geiger is rejoining the company with gusto. “The opportunity for sales and profit growth; the ability to reinforce the company’s special culture; and the chance to work closely with, and influence, the management team and the field organization combine to create a compelling and dynamic challenge,” Geiger said. “It is with enormous excitement that I prepare to lead the Aeropostale team into a future filled with optimism and opportunity.”
Shifts In Teen Trends
Teens are flocking toward stores such as Forever 21, H&M, Marshalls and Zara as fashion trends move away from preppier looks and shoppers opt for more boho and vintage styles. In addition, direct competitors in Aeropostale’s market — including Abercrombie, American Eagle and Hollister — are offering customers steeper discounts, which is diminishing Aeropostale’s former competitive advantage.
With the company reporting $70 million in total loss, the brand is striving to bring in profits with new brand imaging. For example, in an attempt to regain popularity among high schoolers, Aeropostale is focusing on partnerships with fashion-forward icons. To that end the retailer recently has partnered with teen YouTube sensation Bethany Mota and the TV show Pretty Little Liars.