Aeropostale Thriving In The Recession

Rather than get one top at a Hollister, they can get two or three at Aeropostale.

– Brian Tunick, Retail Analyst, JP Morgan

The last three months, like the ten consecutive quarters that preceded it, was a period of record sales and record earnings for Aeropostale.  We all know these results are extraordinary given the macroeconomic climate in which we are operating.

– Julian Geiger, Aeropostale’s Chairman and CEO, 1st Quarter Earnings Release, May 21

I was just reading an interesting front page New York Times article from Saturday (“Retailers See Back To School Sales Slowing”, The New York Times, August 15, A1) on how the coming back to school season is likely to be very bad.  The article notes that Google searches for Walmart and “school supplies” are up 160% compared to last year.  Google searches for Aeropostale (ARO) are up 50%.

So I looked into it and was excited to discover that sales at Aeropostale, a teen specialty retailer catering to 14-17 years olds, are absolutely thriving in the recession.  Same store sales were up 11% for the quarter ended May 2, 2009 and were up 6%, 12% and 19% for July, June and May, respectively.  That is huge!  Profits were up 81% for the May 2 quarter.

Aeropostale reports 2nd quarter earnings Thursday (August 20) after the close.  Since same store sales have been so strong, another outstanding quarter seems assured.

Just goes to show that there are always opportunities for investors willing to look.

Disclosure: Top Gun has no position in Aeropostale (ARO) shares.