Aeropostale Inc. (ARO) rose the most in almost 12 years after the struggling kids and teen apparel chain said Julian Geiger has returned as chief executive officer.
Thomas Johnson agreed with the board to step down as CEO and as a director, the New York-based company said in a statement yesterday. Geiger served as Aeropostale’s CEO from 1996 to early 2010 and was the top executive at Crumbs Bake Shop Inc. (CRMBQ), the cupcake chain that shuttered its stores last month, from late 2011 through 2013.
Johnson had been trying to turn around the retailer after six straight quarters of losses and in April said the company would close about 125 of its P.S. kids-focused stores, cutting about 100 jobs. The chain also entered a strategic partnership with Sycamore Partners in March while receiving a $150 million loan as activist investors press for bigger changes, including a possible sale of the company.
“This is a guy who ran the business at a very successful point in its history, and it’s very easy to say, ‘Hey, just bring that guy back in and we’ll shine again,’” Jeffrey Toohig, a New York-based analyst at Investment Technology Group Inc., said in a phone interview. “Whether or not that’s true, we’ll find out.”
Shares of Aeropostale, which has in excess of 1,000 stores, increased 19 percent to $3.87 at the close in New York, their biggest one-day gain since Oct. 11, 2002. The stock had fallen 64 percent this year through yesterday.
Aeropostale also said that its second-quarter operating loss was $36 million to $38 million, narrower than its previously forecast loss of $49 million to $54 million. The loss excludes charges such as asset impairment that weren’t reflected in its original guidance, Aeropostale said. The company plans to report full second-quarter results on Aug. 21.
“It’s decidedly unimpressive in terms of performance,” Toohig said. “It’s a tough environment and a tough space, but they’re doing worse than their competitors.”
Geiger rejoined Aeropostale’s board of directors in May as part of the financing pact with Sycamore.
With the injection of capital and influence on the board, Sycamore isn’t more likely to complete a buyout of the retailer in the next three to four quarters, Toohig said.
“Ultimately the concern is the ability of this company to compete in a space that has not just hit a slowdown in terms of the economy but has from all evidence seen a fundamental shift in the dynamic,” Toohig said.
To contact the reporter on this story: Lindsey Rupp in New York at email@example.com