Investing.com -- Aeropostale Inc (N:ARO), a U.S. mall-based specialty retailer of casual apparel for young men and women, announced a host of broad company changes on Tuesday, which includes a comprehensive cost reduction structure.
As part of the plan, Aeropostale plans to eliminate approximately 100 positions of 13% of its corporate headcount by the end of fiscal year 2015. Following a lengthy strategic business review, Aeropostale said its new cost reduction program will target both direct and indirect spending across the company.
As a result, Aeropostale expects the new initiative to generate approximately $35 million to $40 million in annualized pre-tax savings, which will likely be realized in fiscal year 2016. The company also estimates that it will record pre-tax cash expenses of approximately $1.5 million during fiscal 2015 related to this program.
For the fourth quarter of 2015, Aeropostale expects to record operating losses up to $10 million, after the company reiterated its forward guidance on Tuesday. The losses represent diluted per share earnings losses of 0.04 to 0.17 on the quarter. The guidance does not take into account the planned reductions in Aeropostale's corporate staff.
"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," Aeropostale CEO Julian Geiger said in a statement. "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."
In the third quarter, Aeropostale saw its net sales decrease by 20% to $363.3 million, while its comparative stores sales fell 10% on an annual basis. It led to a net loss of $26.4 million or 0.33 per diluted share.
Shares in Aeropostale fell 0.01 or 5.20% to 0.24 on Tuesday.