Aeropostale Shares Soar as Losses Narrow Over Holiday Period

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Aeropostale Inc. rose the most in more than 12 years after paring losses during the holidays, sparking optimism that the struggling teen-apparel chain can stage a comeback.

The company now expects a fourth-quarter loss of 25 cents to 31 cents a share, according to statement today. Aeropostale had previously predicted a deficit of as much as 44 cents, while analysts had estimated 42 cents on average.

The New York-based company has been cutting expenses and selling higher-margin products, helping stem its red ink even as sales continue to decline. Investors responded by sending the stock soaring 24 percent to $2.80 at the close in New York, the biggest one-day gain since 2002.

“It’s a combination of very low expectations and the fact that they did perform fairly well,” said Betty Chen, an analyst at Mizuho Securities in San Francisco who has a hold rating on the shares. “You’re probably seeing some short covering along with some renewed hope.”

The results mark a victory for Julian Geiger, who returned to the chief executive spot in August after a four-year hiatus. As part of the company’s cost cuts, it’s closing as many as 240 locations of its main brand and all 125 of its P.S. children’s chain.

The stock dropped 74 percent last year, its fourth straight year of declines.