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Aeropostale files for bankruptcy protection and will shut 154 stores, 5 in California

Aeropostale files for bankruptcy protection and will shut 154 stores, 5 in California
Women pass an Aeropostale store in New York's Times Square on Dec. 2. (Mark Lennihan / Associated Press)

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.

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Five Aeropostale stores are closing in California.

  • Westside Pavilion store, 10800 W. Pico Blvd., Los Angeles

  • Sunrise Mall store, 6041 Sunrise Mall, Citrus Heights

  • Chico Mall store, 1950 East 20th St., Chico

  • Oakridge Mall store, 925 Blossom Hill Road, San Jose

  • Town Center at Otay Ranch store, 2015 Birch Road, Chula Vista

The retailer said it plans to emerge from Chapter 11 as a "standalone 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.

In 2013, the retailer tried to reconnect with teens by announcing a design collection with social media star Bethany Mota that was focused on apparel and accessories.

"Bethany Mota with all of her social media following should have been the perfect representation," Siegel said. "When a retailer brings on among the most popular social media presence in the world and is unable to drive the sales they need at a profitable rate, it exemplifies the issue that they're facing."

The company's fourth-quarter net sales decreased 16.1% to $498 million from $593.8 million a year earlier. Comparable sales decreased 6.7% 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.

UPDATES:

2:14 p.m.: This post has been updated with information about store closings in California.

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This post was originally published at 9:59 a.m.

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