Q3 2012 Earnings Call Transcript

Transcript Call Date 11/28/2012

Operator: Thank you for joining us for the Aeropostale Conference Call to review Third Quarter 2012 Financial Results. At this time, all parties are in a listen-only mode. Following the management's presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. I would like to remind everyone that this conference call is being recorded.

I would now like to introduce Ken Ohashi, the Company's Vice President of Investor and Media Relations. Thank you. You may begin.

Kenneth Ohashi - VP, Investor and Media Relations: Thank you all for joining us this afternoon. With me here today are Tom Johnson, our Chief Executive Officer; Michael Cunningham, our President; and Marc Miller, our Chief Financial Officer. I am also pleased to welcome our new EVP of Aeropostale brand Emilia Fabricant.

We issued a press release earlier this afternoon announcing our third quarter 2011 financial results. A copy of the release can be found on our corporate website.

Before we begin, I'd like to remind you that during this earnings conference call, certain statements and responses to questions may contain forward-looking information, such as forecast of future financial performance. Forward-looking information and statements involve known and unknown risks and uncertainties which may cause our actual results in future periods differ materially from our forecasted results. Those risks are described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, all of which have been filed with the SEC and are available on our website. We undertake no obligation to update or revise any forward-looking statements reflect subsequent events or circumstances. Listeners of this call are referred to those filings.

Before I turn the call over to Tom, I would like to ask everyone to limit themselves to one question during our Q&A session to allow everyone a chance to speak. Once we've gone through a round of questions, we'll go back and you may queue up again at that time.

I would now like to turn the call over to Tom.

Thomas P. Johnson - CEO: Thank you, Ken. Good afternoon, everyone, and thank you for joining us today. I'd like to take you through some of the highlights from the third quarter and the progress that we are making on our strategic initiatives. I'll then turn the call over to Marc who will take us through the financials.

The third quarter came in as we anticipated. Our teams navigated through an intensely promotional and competitive retail environment and were able to achieve net earnings slightly ahead of our previously issued guidance. From a merchandise perspective, we experienced similar trends to the first half. Our girl customer continued to respond positively to our fashion offering, including fashion tops and woven and colored and printed denim. However, our girls' core basic business, particularly graphics and fleece experienced pricing pressure and their performance fell below our expectations.

Our men's and accessories businesses had solid quarter with increases in both comps and merchandise margins. During the quarter, we also launched our fall marketing campaign with Chloe Grace Moretz. We believe that Chloe is a perfect brand ambassador to showcase our fashion and we were pleased with the positive reaction from fashion editors, customers and store associates in response to this campaign.

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