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Aeropostale latest teen store to post weak sales

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August 22, 2013 05:40 PM EST | AP

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NEW YORK — Aeropostale Inc. posted a loss in its latest quarter on poor sales, issued a weak outlook and increased the number of stores that it plans to close.

The New York-based company is the latest teen retailer to report slumping sales. Abercrombie & Fitch and American Eagle Outfitters have also noted poor customer traffic. Teen shoppers can be fickle, with constantly changing tastes. Their purchases tied to how much their parents are willing to spend, and higher taxes this year have weighed on consumers.

Aeropostale CEO Thomas Johnson said Thursday that results are particularly disappointing given the effort the company has put into changing the brand recently. Known for putting its logo all over its clothing, Aeropostale is trying to shift to selling trendier, more expensive clothing.

While industry analysts have said that may prove successful for the company in the long run, it could mean slower sales in the short term as shoppers are hesitant about paying more for clothing at the store.

The stock fell 12 percent to $9.70 in after-hours trading Thursday.

The company's loss came to $33.7 million, or 43 cents per share, for the fiscal second quarter that ended Aug. 3. In the same period a year ago, it posted a profit of $71 million, or break-even per share.

After charges for writing down the value of stores and other one-time items, the company's loss came to 34 cents per share. Analysts polled by FactSet, on average, were anticipating a loss of 29 cents per share. Revenue fell 6 percent to $454 million as sales in established stores and online sank 15 percent.

The company had already let investors know bad news was coming, cutting its outlook for the quarter in early August. It said it had to mark down more clothing amid weak demand.

And the heavy discounting is expected to continue, leading to a surprise loss in the current quarter. The company expects a loss of 21 to 26 cents per share, excluding one-time items. Analysts forecast earnings of 22 cents per share for the quarter through October.

Johnson said the negative outlook reflects the tough market conditions. He said the company will continue to refine its merchandise and improve its market to try and draw shoppers. "We are committed to turning our business around and remain focused on shifting brand perception and recapturing market share," he said in a statement.

Aeropostale also doubled its store closing plans. It now plans to shut down 30 to 40 locations this fiscal year. It had 1,119 stores open at last count.

The stock had closed Thursday down 44 cents, or 3.9 percent, at $10.98. Shares have dropped 16 percent this year and 25 percent in August.