Aeropostale Files For Bankruptcy, Plans To Close 154 Stores

Source: Washington Post

Yet another retailer has cracked under the weight of teen’s changing shopping habits.

Aeropostale on Wednesday filed for Chapter 11 bankruptcy, saying in the filing that it was seeking approval to immediately close 154 of its more than 800 stores. The news didn’t come as much of a surprise on Wall Street: Sales have been in a long-term slide at the troubled retailer, and the company had said back in March that it was “exploring strategic alternatives,” including finding a buyer. Just two weeks ago, its stock was delisted from the New York Stock Exchange because it was trading for just pennies a share.

That Aeropostale had to resort to bankruptcy reflects some big-picture challenges in retailing. Many of the chain’s stores are located in the kinds of smaller, regional malls that have experienced plummeting foot traffic due to the rise of online shopping. And teen retailers that dominated high-school dressing trends in the 90s and early aughts generally have struggled to adapt to the preferences of today’s young shoppers, who are instead flocking to fast-fashion outposts such as H&M and Zara. Fellow teen retailers Delia’s, Deb Stores and Wet Seal ended up filing for bankruptcy and closing their entire store fleets last year because they could not figure out how to court customers in this shopping environment.

And retail bankruptcies have hardly been limited to the teen-focused set: Sports Authority filed for bankruptcy in March and could end up closing all or some of its stores. Women’s evening wear retailer Cache filed for bankruptcy last year and closed all of its more than 200 locations.

Aeropostale had been trying desperately to reverse its mounting losses. In January, it had announced a strategic plan that included cutting 13 percent of its corporate workforce and implementing a cost-cutting program that it hoped would generate up to $40 million in savings. Since August 2014, it has installed a new chief executive and chief financial officer. And it tried to overhaul its merchandise by focusing on a customer it calls the “flirty tomboy girl.” The look is supposed to be more classic and less trendy than what the fast-fashion stores are hawking, and a clear departure from the logo-emblazoned looks that were once the chain’s bread and butter.

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