Aeropostale Said to Gauge Interest Amid Activist Pressure

Aeropostale Inc., the teen-clothing retailer under pressure from an activist investor, has contacted at least two private-equity firms as management explores strategic options, people with knowledge of the matter said.

The New York-based retailer also has reached out to investment banks about how to handle pressure from activist investor Crescendo Partners or run a sale process, said two of the people, who asked not to be identified because the process is private. The company isn’t in negotiations to sell itself yet, the people said.

Aeropostale, which has lost money for four straight quarters, is responding to pressure from Crescendo, which sent a letter to the company in November demanding that it sell itself to another apparel retailer or be taken private.

A spokeswoman for Aeropostale said the company doesn’t comment on rumor or speculation. The retailer plunged 37 percent in the 12 months through yesterday to close at $7.73, giving it a market value of about $607 million. After rising as much as 6 percent today, the shares ended slightly higher at $7.78 in New York trading. Crescendo said in its November letter that Aeropostale could be worth $14 to $16 a share.

Aeropostale Chief Executive Officer Tom Johnson is trying to turn the struggling retailer around with updated fashions and a plan to close as many as 40 underperforming stores this year. The company lost $25.6 million in the fiscal third quarter ended Nov. 2 on $514.6 million in revenue. Sales dropped 15 percent during the period.

Restructuring Efforts

While Aeropostale didn’t find any buyers in 2011 after quietly reaching out to private-equity firms about a possible sale, the people familiar said, it’s hoping that current restructuring efforts may make it a more attractive target, one of the people said.

Crescendo, which didn’t disclose the size of the stake it owns in Aeropostale in its November letter, said that together with its affiliates it is a “significant stockholder.” Private-equity firm Sycamore Partners took an 8 percent stake in the company through its Hummingbird LLC unit in September.

Eminence Capital LLC, which is pushing Jos. A Bank Clothiers Inc. to merge with Men’s Wearhouse Inc., had a 5.4 percent stake in Aeropostale as of Sept. 30, data compiled by Bloomberg show.