Aéropostale, Inc. (ARO)
Q2 2009 Earnings Call Transcript
August 20, 2009 4:15 p.m. ET

Executives

Kenneth Ohashi - Vice President, Investor and Media Relations
Julian R. Geiger - Chairman and Chief Executive Officer
Mindy C. Meads – President, Chief Merchandising Officer and Director
Michael J. Cunningham - Executive Vice President and Chief Financial Officer
Thomas P. Johnson - Executive Vice President, Chief Operating Officer and Director

Analysts

Christine Chen - Needham & Company, LLC
Betty Chen - Wedbush Morgan Securities
Jeffrey Klinefelter - Piper Jaffray & Co.
Roxanne Meyer - UBS
Michelle Tan - Goldman Sachs
Stacy Pak - SP Research
Edward J. Yruma - KeyBanc Capital Markets
Brian Tunick - JPMorgan
John Morris - BMO Capital Markets
Kimberly Greenberger - Citigroup
Janet Kloppenburg - JJK Research
Dana Telsey - Telsey Advisory Group
Laura Champine - Cowen and Company, LLC
Michelle Clark - Morgan Stanley
Linda Tsai - MKM Partners
Robin Murchison – SunTrust Robinson Humphrey
Richard Jaffe - Stifel Nicolaus & Co.
Marni Shapiro - The Retail Tracker
Howard Tubin - RBC Capital Markets
Lorraine Hutchinson - Bank of America/Merrill Lynch

Presentation

Operator

Good day and thank you for joining us for the Aéropostale conference call to review second quarter fiscal 2009 financial results. At this time, all parties are in a listen-only mode. Following the management presentation, we will conduct a question-and-answer session. Instructions will be provided at that time, for you to queue up for your questions. If anyone has any difficulty hearing this conference, please press star zero for operator assistance at any time. I would like to remind everyone that this conference is being recorded.

I would now like to introduce Ken Ohashi, the company''s Vice President of Investor and Media Relations. Please go ahead, sir.

Kenneth Ohashi

Thank you all for joining us this afternoon. With me here today are Julian Geiger, our Chairman and Chief Executive Officer; Mindy Meads, our President and Chief Merchandising Officer; Tom Johnson, our Chief Operating Officer; and Michael Cunningham, our Chief Financial Officer.

We issued a press release earlier this afternoon announcing our second quarter financial results. A copy of the release can be found on our corporate website.

Before we begin, I''d like to remind you that during this earnings conference call certain statements and responses to questions may contain forward-looking information such as forecast of the future financial performance. Forward-looking information and statements involve known and unknown risks and uncertainties which may cause our actual results in future periods to differ materially from our forecasted results. Those risks are described in our annual report on Form 10-K and our quarterly reports on Form 10-Q, all of which have been filed with the SEC and are available on our website.

We undertake no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Listeners of this call are referred to those filings. Before I turn the call over to Julian, I would like to ask everyone to limit themselves to one question during our Q&A session to allow everyone a chance to speak. Once we''ve gone through a round of questions, we will go back and you may queue up again at that time.

I would now like to turn the call over to Julian.

Julian R. Geiger

Thanks, Ken. Good afternoon, everyone. All of us thank you for participating in today''s conference call.

As you can well imagine, we are very pleased with our results for the second quarter which once again exceeded expectations. Our performance represented another period of record-setting sales, record-setting operating margins and record-setting earnings. At this point, I would like to highlight some of the key financials of the quarter for you.

Net earnings were a record $0.57 per share, an 84% increase over the same period last year. Net sales increased 20% to a record $453 million. Same stores sales increased 12% on top of an 11% increase last year. Net sales from our e-commerce business increased 49% to $15.8 million and operating margins increased 480 basis points, driven by increased merchandise margins by strategic expense controls and by the leverage of our business.

Results such as these are not the by-product to good luck. They are the direct result of the expertise, commitment and determination of an entire organization. Mindy, Tom, Michael and I thank everyone within the Aéropostale family for their impressive contributions to an outstanding second quarter and a memorable first half of fiscal 2009.