On Tuesday, Aeropostale, Inc. (NYSE: ARO), a specialty teen retailer of casual apparel, announced that it plans to organize a new cost reduction program.
Subsequent to the planned business review, the retailer has started an unfriendly new cost reduction program aiming both the indirect and direct spending across the company. The organization expects the new program to make about $35 million to $40 million in annualized pre-tax savings, which is anticipated to be achieved in fiscal 2016.
Aeropostale also estimates to report pre-tax cash expenses of about $1.5 million during fiscal 2015 related to this program. The said company had instituted a program to reduce its cost that goals for direct and indirect organizational spending. The company targets young men and women aged 14 to 17 through stores and websites. For those ages 4 to 12 years old, Aeropostale reach them through P.S. from Aeropostale store and website.
As part of its new cost reduction program, the teen retailer said it plans to slash corporate headcount by nearly 13 percent, or 100 positions by the end of fiscal 2015.
According to Abc News, fashion attires like Forever 21 and H&M have become increasingly well-known with youths than stores like Abercrombie & Fitch, American Eagle Outfitters, and Aeropostale.
According to Street Insider, the New York-based teen retailer also reaffirmed its net loss outlook, excluding the influence of the above-mentioned headcount reductions, accelerated store closure costs, lease buyout costs, and any store impairments, to be in the range of $0.04 to $0.17 per diluted share and operating loss in the range of $0.0 million to $10.0 million for fourth quarter 2015.
Previously in its third quarter reports, the retailer said that it expects to invest about $14 million for store remodels and other certain infrastructure investments.
In the company's business update Julian R. Geiger, Chief Executive Officer, commented, "The decisions that led to today's actions are a result of our focus on Aéropostale's future, and our goal of returning to profitability. The reiteration of our fourth quarter guidance demonstrates sequential improvement from a sales and operating loss perspective. We are building upon areas of progress and continue to work to improve our business. We look forward to discussing our plans for 2016 on our next earnings call."
Moreover, the company announced that Julian R. Geiger has willingly surrendered 1 million stock options, which the company plans to utilize for retaining and inspiring other important members.
Aeropostale traded down 5.200% during Tuesday trading session, reaching $0.237. The company's stock had a trading volume of 530,987 shares.
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