It’s not easy being a teen clothing retailer
Today’s fickle teens are just not buying clothes like they once did. Many are much more interested in purchasing gadgets than filling out their wardrobe. Many others buy on the cheap, preferring the disposable duds from fast fashion chains over alternative options in the market. Aéropostale, one of those alternative options, has filed for bankruptcy protection less than two weeks after the New York Stock Exchange suspended trading of the company’s shares due to its “abnormally low” trading price.
Aéropostale announced it would shutter 154 stores in the U.S. and Canada as part of its reorganization plan. The chain, which has been hurt by the decline in mall traffic in recent years, currently operates around 800 stores. Aéropostale plans to use the protection granted under Chapter 11 to help “optimize its store footprint, access additional tools to shed or renegotiate burdensome contracts.”
Aéropostale is also seeking to resolve a dispute with Sycamore Partners that led to tighter payment terms being imposed on the retailer. Earlier this year, Aéropostale accused MGF, a division of Sycamore, of violating terms of a 10-year supply contract between the companies. The exact nature of the alleged violation is not currently known, but the retailer has claimed it resulted in supply disruptions that materially hurt its business.
“While initiatives such as the implementation of our two-chain Factory and Mall strategy and our merchandise repositioning have started to gain traction, the ripple effects of an ongoing dispute with our second-largest supplier put substantial strain on our liquidity while also preventing us from realizing the full benefits of our turnaround plans,” said Julian Geiger, CEO of Aéropostale, in a statement. “As a result, we have chosen to take more decisive and aggressive action to create a leaner, more efficient business that is well-positioned to compete and succeed in today’s retail environment.”
- Aéropostale, Inc. Takes Next Steps In Business Transformation – Aéropostale, Inc./PRNewswire
- Aéropostale Announces Suspension Of Trading On NYSE; Common Stock To Trade On The OTCQX Market – Aéropostale, Inc.
- Aéropostale Files for Bankruptcy Protection – The Wall Street Journal
In your mind, does Aéropostale have a bigger problem on the consumer or vendor front? What would you do at this point if you were running Aéropostale?