Aeropostale Inc. filed for Chapter 11 bankruptcy protection on Wednesday, the latest in a wave of teen retailers that have struggled to adapt to changing fashion trends.
The New York-based apparel company will close 113 of its 739 stores in the U.S. and all 41 of its stores in Canada. U.S. store-closing sales are expected to start this weekend.
The retailer said it plans to emerge from Chapter 11 as a “stand-alone enterprise” with fewer stores and increased operating efficiencies.
In a statement, Aeropostale Chief Executive Julian Geiger said the company has “chosen to take more decisive and aggressive action to create a leaner, more efficient business that is well-positioned to compete and succeed in today’s retail environment.”
Aeropostale and other teen retailers have been struggling to compete with the popular fast-fashion trends offered at stores such as Forever 21 and H&M. Last month, Pacific Sunwear of California Inc., better known as PacSun, filed for Chapter 11 bankruptcy protection.
“The teen apparel space is obviously very difficult, very competitive when things were great,” said Simeon Siegel, senior retail analyst at Nomura Securities. “And over the last few years, things haven’t been great.”
Aeropostale was long seen as the value option for teens who wanted trendy animal logos on their polos, Siegel said. But as styles changed and prices plummeted, Aeropostale’s advantage decreased.
The company’s fourth-quarter net sales decreased 16.1 percent to $498 million from $593.8 million a year earlier. Comparable sales decreased 6.7 percent from a year earlier.
On April 22, the company said it received notice that the New York Stock Exchange was commencing proceedings to delist its stock because of an “abnormally low” trading price and that trading was suspended. Aeropostale said at the time that it did not intend to appeal the delisting determination.
As part of the Chapter 11 proceedings, Aeropostale has secured a commitment for $160 million in debtor-in-possession financing from Crystal Financial LLC.
The retailer also said it expects to honor all gift cards, have new store promotions and continue to pay suppliers and employee wages and benefits.