Aéro: The weakest link?

 Aéropostale is in the process of closing at least 113 stores in the United States while trying to dig its way out of a bankruptcy hole and compete with other popular clothing stores. The tween clothing chain has grown to 739 stores in 50  states and 41 stores  in Canada, however, its consumers ratings and filings aren’t indicative of that success. This is especially relevant for the future of the store located in University Mall.

    Aéropostale is one of the few remaining chain stores at University Mall. This specific store has recently transitioned into an Aéropostale Factory store, which means clothing will be sold at a reduced price as compared to other Aeropostale stores.

“They still carry some of the same products. Some of the products are more exclusive, we will have a lot more graphics and sweat options,” Marlene Rivera* said.

She described how this process works and shared that the decision to transition is made based upon demographics of the location of the store and past sales records. The stores that aren’t doing as well in the local market will most likely be changed to a factory store to improve business, especially since the filing for Chapter 11 bankruptcy. The stores that continue to fail with sales will be placed on the list to close.

    The U.S. Courts through uscourts.gov define chapter 11 bankruptcy as a means of reorganization. “A chapter 11 debtor proposes plan of reorganization to keep its business alive and pay creditors over time.”  Aéropostale specifically plans to finance $160 million from Crystal Financial LLC to do this.

Associates of the Aéropostale Factory Store in University Mall declined to comment on the specific facts regarding finances, however they did express sorrow for the closures of multiple locations and hope that their company can arise from these issues.

Aéropostale has an estimated $100-$500 million in both assets and liabilities. This together provides for no working capital. This resulted in the partnering mentioned earlier. However, this isn’t the only financial strategy and crisis it faces.

Aeropostale wanted to increase profit through sales and the loan from Crystal Financing LLC. This was disapproved of by one of their vendors MGF Sourcing US LLC, who wanted stricter payments that Aéro claims forced them into bankruptcy. The feud that ensued would reach a settlement, but only if Aéropostale fulfilled all of the criteria in their bankruptcy package.

The question now is if Aéro can actually turn itself around. Consumers feel that this issue wasn’t shocking when it happened and don’t see much hope for rebranding.

“I used to shop at Aéro when I was younger in middle school and I guess I go in now for my younger sister but that’s about it,” Emily Hughes, a USF student, said.

This was the general consensus for many students and consumers. Aéropostale targets a younger demographic that is growing up. It also has not been as successful as other competitors in reflecting changing trends in designs.

 

“I typically shop at stores like H&M and Forever 21. They don’t have their brands written across their shirts or clothes. Even Hollister and American Eagle are getting away from that. They are coming out with cute stuff now and occasionally I will buy, but they really should have done this earlier on,” said USF student, Angela Cerbone.

Aéropostale has used social media icons like Bethany Mota to rebrand in the past years, however, consumers feel this isn’t enough and that it should have done this sooner to avoid bankruptcy.

The associates at the Aéropostale Factory Store at University Mall agree with this, however, they feel that this won’t affect this specific store because of how much they sell.

“They haven’t given us the final word but they are keeping 400 stores open and this store does pretty good so we are hoping to be one of those stores.” Rivera* said.

This can be found to be quite misleading, since this specific location is having closing sales. Sales that consumers, such as Cerbone, still aren’t impressed with.

Time will tell for this store location, especially with the prolonged renovations University Mall has yet to undergo. The brand itself still remains optimistic and has set the goal to be out of bankruptcy within six months. Consumers continue to compare this brand with other competitors and don’t know what to expect.  

“Very rarely do businesses come out of chapter 11 without residual effects. If they don’t completely rebrand they won’t be able to get themselves out of the hole they are in,” Christina Millard, a USF student, said.

 

*Sources wished to remain anonymous

What are your thoughts? Will Aéro pull itself out of the whole? How will it affect our local mall?