Aeropostale (NYSE: ARO) will close 125 mall-based stores and eliminate 100 headquarter positions as part of an ongoing restructuring effort to cut costs.
The teen retailer will shut down 125 of its 150 P.S. from Aeropostale stores focused on kids ages four through 12. The stores will close by the end of the fiscal year.
Aeropostale attributes the decision to a shift in consumer habits and declining mall visits. Looking ahead, the 150 P.S. brand will be restructured to focus on faster-growing sales channels, including off-mall locations such as outlets, e-commerce and international licensing.
In addition to the store closures, Aeropostale plans to eliminate about 100 corporate jobs. 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, of which approximately $5 million to $10 million is expected to be achieved in fiscal 2014.
The changes come on the heels of another tough quarter for the teen retailer, marking the fifth straight quarter of losses. Aeropostale reported a $70 million loss and a 15 percent same-store sale decline in the fourth quarter. The company also said it had closed 32 Aeropostale stores during the period and planned an additional 50 closures this year. In March, the chain announced it entered a strategic partnership with Sycamore Partners, which will provide Aeropostale with a $150 million loan.
Aeropostale operates 931 stores in the U.S. and Canada and its licensees operate an addition 117 locations worldwide.
This is the second major retailer that has announced the closure of mall-based units. Wet Seal (NASDAQ: WTSL) announced on Friday it is shuttering contemporary nameplate Arden B to concentrate on the fast-fashion teen business and the growing plus-size junior market. The company currently has 54 Arden B stores and 478 Wet Seal units. Some 31 of the 54 mall-based locations will be converted to Wet Seal or Wet Seal+ stores and the rest should be closed by this fall. The changes are expected to be complete by the end of July, in time for the back-to-school selling season.
-See this Aeropostale press release
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