Shares of Aeropostale fell 11 percent on Thursday, after the company offered an outlook that disappointed investors and reported a key November sales comparison that fell short of expectations.
Aeropostale Inc.'s low prices and planned promotional strategy helped its results amid the recession, while competitors such as higher priced Abercrombie & Fitch Co. saw sales drop as consumers cut back.
But some analysts fear the teen apparel retailer's yearlong run of gaining market share might be winding down.
Late Wednesday, Aeropostale reported earnings jumped by nearly half as sales rose 18 percent to $567.8 million. But the New York company added that it expects fourth-quarter profit between $1.20 to $1.24 per share, while analysts predict a profit of $1.22 per share. It said sales in stores open at least one year, a key sales measurement, rose 7 percent, but that missed the 7.7 percent rise analysts surveyed by Thomson Reuters were expecting.
FBR Capital Markets analyst Adrienne Tennant said that guidance range may prove to be conservative, but added investors probably were disappointed by the outlook and the fact that November sales in stores open at least one year missed expectations.
"We remain concerned that, as Aeropostale begins to lap extremely difficult two-year compar(ison)s, the company's top line may continue to be challenged," she said. "Furthermore, we believe that as competitors in the teen space adopt a more promotional stance, Aeropostale could be challenged to maintain its market share."
Tennant, who rates the company "Market Perform," lowered her price target to $31 from $35.
Analysts at Raymond James, Credit Suisse, Wedbush Morgan, Jefferies, Barclays and Thomas Weisel also all cut their price targets on the stock.
The stock price has doubled this year. It gave back some gains Thursday, falling $3.75, or 11.5 percent, to $28.95. The stock has traded between $16.17 and $44.85 over the past year.