Aeropostale, Inc. (ARO)
Q3 2008 Earnings Call Transcript
December 3, 2008 4:15 p.m. ET

Executives

Kenneth Ohashi – Vice President, Investor & Media Relations
Julian Geiger – Chairman and Chief Executive Officer
Mindy Meads – President and Chief Merchandising Officer
Michael Cunningham – Executive Vice President and Chief Financial Officer
Thomas Johnson – Executive Vice President and Chief Operating Officer

Analysts

Betty Chen - Wedbush Morgan Securities Inc.
Christine Chen - Needham & Company, LLC
Laura Champine - Cowen and Company
Brian Tunick - JPMorgan
Adrienne Tennant - Friedman, Billings, Ramsey & Co.
Jeffrey Klinefelter - Piper Jaffray & Co.
Roxanne Meyer - UBS
Michelle Clark - Morgan Stanley
Kimberly Greenberger - Citigroup
Marnie Shapiro - The Retail Tracker
Janet Kloppenburg - JJK Research
Dana Telsey - Telsey Advisory Group
Linda Tsai - MKM Partners
Howard Tubin - RBC Capital Markets

Presentation

Operator

Thank you for joining us for the Aeropostale conference call to review third quarter fiscal 2008 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 questions. If anyone has any difficulty hearing this conference, please press “*0” for operator assistance at any time. I would like to remind everyone that this conference call is being recorded.

I would now like to introduce Mr. Ken Ohashi, the Company''s Vice President of Investor and Media Relations.

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 third 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 forecasts of 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.

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

Julian Geiger

Thanks Ken. Good afternoon everyone, and thank you for joining us today.

As I''m sure you have already heard, earlier today we announced that Aeropostale achieved record-breaking sales and profits for the third quarter. This performance is impressive in and of itself, but when put into perspective against the uniquely challenging economic panorama with which we are faced, it is extraordinary.

Throughout this entire year we have experienced unparalleled success. I must openly acknowledge how the determination and talent of our entire organization, the clarity of our strategies, the precision of our execution, and the nimbleness of our operating model have enabled us to elevate respect for the Aeropostale brand to an all-time high.

I would like to highlight some of the statistical accomplishments of the quarter for you. Net sales for the period increased 17% to $482 million and same-store sales increased 7%. Gross profit grew by 110 basis points while operating margins improved by 60 basis points. Net earnings per share grew 31% to $0.63 per share this year from $0.48 per share last year. In addition, we continue to maintain a strong balance sheet with absolutely no debt.