Aeropostale Inc. (ARO)
Q4 2008 Earnings Call Transcript
March 12, 2009, 4:15 p.m. ET

Executives

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

Analysts

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

Presentation

Operator

Thank you for joining us for this Aeropostale conference call to review fourth quarter fiscal 2008 financial results. At this time, all parties are in a listen-only mode. Following the management presentation, we’ll 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 and I would like to introduce Mr. Ken Ohashi, the company’s Vice President of Investor & 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 fourth quarter and fiscal 2008 financial results. A copy of the release can be found on our corporate website.

Before we begin, I would 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 remind everyone to limit themselves to one question during our Q&A session to allow everyone a chance to speak.

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. All of us at Aeropostale are extremely pleased with our record results for both the fourth quarter and fiscal 2008. While the results would be impressive in any economic climate, they are truly extraordinary given the uncertain and challenging times in which we are operating.

Our performance underscores the vitality of the Aeropostale brand, the strength of our operating model and our ability to understand the team customer

Let me take you through some of the financial highlights of both the quarter and the year. During Q4 our net sales increased 17% to $690 million and our same-store sales increased 6% compared to a 9% increase last year.

Total net sales from our e-commerce business increased 88% to $41 million and earnings per share grew 6% to a record $1.01 per share from $0.95 per share last year. For the full year, net sales increased 19% to almost $1.9 billion. Total net sales from our e-commerce business increased 85% to $79 million. Same-store sales for the year increased 8% compared to a 3% increase last year marking our 11th consecutive year of positive same-store sales and earnings per share reached $2.21, a 28% increase over earnings of $1.73 per share last year.

A year ago at this time, we clearly outlined our strategic initiatives for the upcoming year. We are very pleased with the manner in which we executed each of these initiatives. As you may remember, these initiatives included listening to our customer, maintaining a fresh and balanced merchandise assortment, delivering compelling values, creating a climate and exciting shopping experience through a preplanned promotion and innovative marketing programs, focusing on inventory management, maintaining a strong balance sheet and managing costs effectively, developing our new concepts and continuing our expansion by opening 89 Aeropostale stores in North America, all of them in our new architectural format.

Our consistent performance throughout the year indicates that we have been successful in achieving these objectives. As a result, our brand has never been stronger and we are well positioned to continue to gain additional market share. I’m very proud of the entire organization’s dedication, determination and expertise.