It’s hard to be a multimillion-dollar fashion chain these days. Now that everyone and their mom buys clothes from their phone, there’s less incentive to go inside an actual store, try stuff on, impulse buy more stuff, and keep coming back. Perhaps that’s why stores like Macy’s and Sears are closing left and right.
Aeropostale, however, hit some pretty devastating losses. Just last year, the company closed most of their stores, got delisted from the stock market, went bankrupt, and laid off thousands of employees. While competitors like Hollister and Abercrombie are still around (but barely), it seemed like the end of the New York-based chain.
Recently, however, something particularly interesting happened: many of those once-closed Aeropostale stores reopened. The company, which pretty much ceased to exist by the end of 2016, now has over 500 open locations and a pretty sweet online storefront. But how did this happen? Let’s take a look.
Aeropostale hemorrhaged money for thirteen straight financial quarters.
The company was losing crazy amounts of money, and their stock was worth practically nothing. In late April, the New York Stock Exchange delisted them, and the stock was traded as an over-the-counter stock (or penny stock).
The company subsequently filed for bankruptcy, closed up their stores, and laid off their employees.
Aeropostale closed hundreds of stores in Canada and the U.S., laying off thousands of workers as they were bid on by companies like Simon Property Group and Authentic Brands Group. As of May 4, the company had 739 stores, many of which were closing.
In September, Authentic Brands Group, Simon Property, and a few other companies group bought Aeropostale for $243 million.
This will let Aeropostale continue to exist while reopening 500 of their closed stores. Authentic Brands owns the rights to clothing companies like Juicy Couture and Frederick’s of Hollywood, and while they don’t make those clothes directly (they’re a licensing company), they have extensive experience in the apparel space.
You can’t buy Aeropostale stock, but you can still buy Aeropostale clothes in stores.
Aeropostale is back to competing with Abercrombie and others, albeit as a private company. If you wanted to buy stock in the brand, you can technically buy stock in Simon ($SPG), a part-owner of the brand.
How will this help Aeropostale in the long run? Authentic Brands knows how to run apparel brands. They could cut costs by licensing out the brand for apparel and other products. Yet with retail stores seeing less foot traffic, one must wonder why these companies decided to reopen five hundred stores. On the bright side, at least thousands of people have jobs now!