Aeropostale Reports First Quarter Results.Business Editors NEW YORK--(BUSINESS WIRE)--June 11, 2002 Aeropostale, Inc. (NYSE NYSE See: New York Stock Exchange : ARO) Earnings Per Share of $0.01 Versus Loss Per Share of ($0.07) in Prior Year; Revenues Increase 50% Versus Prior Year; First Quarter Comparable Store Sales Increase 22% Aeropostale, Inc. (NYSE: ARO), a fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive , mall-based specialty retailer of active and casual apparel for the teen market, today reported results for the fiscal first quarter ended May 4, 2002 versus the quarter ending May 5, 2001. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the quarter ended May 4, 2002 were $0.01 versus a loss for the comparable quarter of $(0.07). Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter increased 50.3% to $85.1 million versus $56.6 million in the comparable period. The increase in net sales was driven by a combination of 58 new stores on a net basis, representing square footage growth of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 25%, as well as comparable stores sales increases of 22.0% in the quarter. The company, in a separate release today, also announced that comparable store sales for the four weeks ended June June: see month. 1, 2002 increased 19.1%. On an ongoing basis, the company anticipates reporting its sales results the first Wednesday Wednesday: see week. following the close of each month. "These results reflect the strength of our product and brand, and underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. our growing position as a destination store for teenagers in the mall mall: see shopping center. (World-Wide Web) mall - A collection of World-Wide Web documents featuring commercial products and services, usually served by one particualr Internet access provider. ," said Julian Julian or Julian the Apostate Latin Julianus Apostata orig. Flavius Claudius Julianus (born AD 331/332, Constantinople—died June 26/27, 363, Ctesiphon, Mesopotamia) Roman emperor (361–363), noted scholar and military leader. R. Geiger, Chief Executive Officer of Aeropostale, Inc. "We are particularly pleased with our comparable store sales performance during the quarter and remain excited as this positive momentum continues." The company reported that its gross margin during the quarter increased 640 basis points to 28.4% versus 22.0% in the year-ago quarter. This increase was primarily due to the leveraging of buying and occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal created principally by the comparable store sales gain during the quarter, as well as improved merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain margins. SG&A expenses as a percentage of net sales were 27.3% for the quarter versus 27.7% last year. Net income for the first quarter was approximately $592,000 or $0.01 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, as compared to a net loss of $(2.0) million or $(0.07) per share in the year-ago quarter. Proforma Proforma A financial projection based on assumptions. net income and diluted earnings per share were $964,000 million and $0.02, respectively. This calculation for proforma net income excludes a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to equity based compensation of approximately $620,000. On May 21, 2002, the company completed an initial public offering of 14,375,000 shares of common stock of which 1,875,000 and 12,500,000 shares were offered by the company and certain selling stockholders, respectively, at a price to the public of $18.00 per share. Upon completing the offering, net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $31.4 million and $209.3 million were distributed to the company and selling stockholders, respectively. Approximately $10.0 million of the net proceeds to the company were used to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. all of the outstanding shares of 12 1/2% Series B redeemable Redeemable Eligible for redemption under the terms of an indenture. preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and pay all accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. and unpaid dividends Unpaid dividend A dividend declared by the directors of a corporation that has not yet been paid. unpaid dividend 1. A declared dividend that has not yet been paid. 2. See passed dividend. thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that . The remainder of the proceeds will be used for working capital and for general corporate purposes, including new store openings. Mr. Geiger continued, "We were very pleased with the completion and performance of our IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. . It is our intent to optimize optimize - optimisation our growth potential and create value for all stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. of the company." The company today also issued guidance for the remainder of the current fiscal year and for the full year ending January January: see month. 31, 2004. The company expects second quarter net sales of $85 million to $87 million, and a loss per share in the range of $(0.11) to $(0.12). On a proforma basis, adjusted for a non-cash equity based compensation charge, the loss per share would be in the range of $(0.04) to $(0.05). Net sales for the third quarter are expected to range from $158 million to $164 million and diluted earnings per share are anticipated to be in the range of $0.49 to $0.51. In the fourth quarter, the company anticipates net sales in the range of $196 million to $200 million and diluted earning per share Noun 1. earning per share - the portion of a company's profit allocated to each outstanding share of common stock net income, net profit, profit, profits, earnings, lucre, net - the excess of revenues over outlays in a given period of time (including depreciation of between $0.52 to $0.55. There will be no proforma adjustments for equity based compensation in the third and fourth quarter of 2002. See Exhibit D. On a full-year basis, for fiscal 2002, the company expects net sales of $526 million to $534 million, diluted earnings per share of approximately $0.95 to $0.97; or $1.01 to $1.03 on a proforma basis. These estimates are predicated on a comparable store sales estimate of mid-to-high single digits for the full year and the opening of at least 80 new stores during fiscal 2002. For fiscal 2003, the company issued guidance for net sales and earnings per diluted share in the range of $660 million to $670 million and $1.30 to $1.32, respectively. Mr. Geiger concluded, "We provide kids with quality merchandise at a value, supported by a meaningful brand name in a fun and exciting shopping environment. This unique position in the market differentiates us from our competition and provides us with a compelling platform for growth. Our management team is focused on executing a plan that will result in long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth and increased shareholder value and we look forward to maximizing the opportunities we have created in the market." About Aeropostale, Inc. Aeropostale, Inc. is a mall-based specialty retailer of casual apparel and accessories that targets both young women and young men aged 11 to 20. The company provides customers with a selection of high-quality, active-oriented, fashion basic merchandise in a high-energy high-energy adj. 1. Of or relating to elementary particles with energies exceeding hundreds of thousands of electron volts. 2. Yielding a large amount of energy upon undergoing chemical reaction. 3. Vigorous; dynamic. store environment. The company maintains complete control over the proprietary brand by designing and sourcing all of its own merchandise. Aeropostale products can be purchased only in its stores, which sell Aeropostale merchandise exclusively. The first Aeropostale store was opened in 1987. As of June 11, 2002, the company operated 307 stores in 34 states. Special Note: Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Except for historical information contained herein, the statements made in this release constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve certain risks and uncertainties, including statements regarding the company's strategic direction, prospects and future results. Certain factors, including factors outside of our control, may cause actual results to differ materially from those contained in the forward-looking statements. These factors include the company's ability to implement its growth strategy successfully, changes in consumer fashion preferences, economic and other conditions in the markets in which we operate, competition, seasonality and the other risks discussed in the company's prospectus dated May 16, 2002 filed with the Securities and Exchange Commission, which discussions are incorporated in this release by reference.
EXHIBIT A
AEROPOSTALE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in Thousands)
May 4, February 2, May 5,
2002 2002 2001
(Unaudited) (1) (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $ 29,239 $ 44,958 $ 4,553
Merchandise inventory 40,009 37,979 38,925
Other current assets 6,664 6,843 5,754
Total current assets 75,912 89,780 49,232
FIXTURES, EQUIPMENT AND
IMPROVEMENTS--Net 53,695 48,646 36,317
OTHER ASSETS 8,661 8,501 9,247
TOTAL ASSETS $ 138,268 $ 146,927 $ 94,796
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving Credit Facility -- -- 10,411
Accounts payable 12,499 13,995 8,969
Accrued expenses 27,058 37,604 16,622
Total current
liabilities 39,557 51,599 36,002
OTHER NONCURRENT
LIABILITIES:
Other liabilities 27,532 25,521 21,750
SERIES B REDEEMABLE
PREFERRED STOCK:
$0.01 par value per share;
authorized, issued and
outstanding, 6 shares
liquidation preference
$6,250; 12.5%
cumulative 9,917 9,617 8,767
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock-- par value,
$0.01 per share; 75,266
shares authorized,
31,047 shares issued and 310 310 310
outstanding
Common stock -- Nonvoting, par
value, $0.01 per share; 75,266
shares authorized, 1,789,
1,118 and 441 shares issued
and outstanding 18 11 4
Additional paid-in
capital 9,474 9,321 648
Deferred
Compensation (3,853) (4,473) --
Retained
earnings 55,313 55,021 27,315
Total stockholders'
equity 61,262 60,190 28,277
TOTAL LIABILITIES AND
STOCKHOLDERS' $ 138,268 $ 146,927 $ 94,796
EQUITY
Note (1) Balance sheet derived from audited financial statements
EXHIBIT B
AEROPOSTALE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND STORE DATA
(in Thousands, except per share and store data)
13 weeks ended 13 weeks ended
May 4, 2002 May 5, 2001
----------------- -------------------
(Unaudited) (Unaudited)
% of % of
Sales Sales
NET SALES $ 85,130 100.0% $ 56,629 100.0%
COST OF SALES 60,981 71.6 44,171 78.0
--------- --------
GROSS PROFIT 24,149 28.4 12,458 22.0
--------- --------
Selling, general and
administrative expenses 23,213 27.3 15,708 27.7
Amortization
of negative goodwill - (59) (0.1)
--------- --------
Total costs and expenses 23,213 27.3 15,649 27.6
--------- --------
INCOME (LOSS) FROM OPERATIONS 936 1.1 (3,191) (5.6)
INTEREST (INCOME)
EXPENSE-- Net (50) (0.1) 249 0.4
--------- --------
INCOME (LOSS)
BEFORE INCOME TAXES 986 1.2 (3,440) (6.1)
PROVISION (BENEFIT)
FOR INCOME TAXES 394 0.5 (1,391) (2.5)
--------- --------
INCOME (LOSS) FROM
CONTINUING OPERATIONS 592 0.7 (2,049) (3.6)
GAIN ON DISPOSAL
OF CHELSEA CAMBELL - 2 0
--------- --------
NET INCOME (LOSS) $ 592 0.7% $ (2,047) (3.6)%
========= ========
BASIC NET INCOME
(LOSS) PER SHARE
From continuing operations $ 0.01 $ (0.07)
From discontinued operations - -
--------- --------
Net income (loss) per share $ 0.01 $ (0.07)
========= ========
DILUTED NET
INCOME (LOSS) PER SHARE:
From continuing operations $ 0.01 $ (0.07)
From discontinued operations - -
--------- --------
Net income (loss) per share $ 0.01 $ (0.07)
========= ========
Basic weighted
average number of shares 32,652 31,543
Outstanding
Diluted weighted average
number of shares 36,458 35,766
Outstanding
Comparable store sales 22.0% 3.4%
Stores open at end of period 292 234
Total gross square
footage at end of period 1,015,724 807,702
EXHIBIT C: The following proforma condensed consolidated
statements of operations for the 13 weeks ended May 4, 2002 and May 5,
2001 exclude equity based compensation of $620 for the 13 weeks ended
May 4, 2002.
AEROPOSTALE, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in Thousands, except per share date)
13 weeks ended
May 4, May 5,
2002 2001
(Unaudited) (Unaudited)
NET INCOME (LOSS) $ 592 $ (2,047)
Equity based compensation 620 -
Income tax effect (a) (248) -
PROFORMA NET INCOME (LOSS) $ 964 $ (2,047)
PROFORMA DILUTED EARNINGS (LOSS)
PER SHARE: $ 0.02 $(0.07)
(a) Assumes a tax rate of 40%
EXHIBIT D: The following table summarizes the guidance for net
sales and earnings (loss) per share for the quarters ended August 3,
2002, November 2, 2002 and February 1, 2003 and the fiscal year ended
February 1, 2003 (in Millions except per share data).
13 weeks ended 13 weeks ended
August 3, 2002 November 2, 2002
Net Sales $85 - $87 $158-$164
Earnings (loss) per $(0.11)-$(0.12) $0.49-$0.51
share
Proforma earnings per $(0.04)-$(0.05) --
share (a)
13 weeks ended Fiscal year ended
February 1, 2003 February 1, 2003
Net Sales $196-$200 $526-$534
Earnings (loss) per $0.52-$0.55 $0.95-$0.97
share
Proforma earnings per -- $1.01-$1.03
share (a)
(a) Proforma earnings per share exclude equity based compensation
of $3,853 and $4,473 for the third quarter ended August 3, 2002 and
fiscal year ended February 1, 2003, respectively, and assumes a tax
rate of 40%.
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