Niche retailers with gains ahead

Article Excerpt

AEROPOSTALE INC. $25.34 (New York symbol ARO; SI Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 92.5 million; Market cap: $2.3 billion; No dividends paid) (all figures reflect a 3-for-2 split on March 5, 2010) is a mall-based retailer of casual clothing and accessories. The company, which now has 907 stores, mainly targets 14- to 17-year-old women and men. Its active-oriented clothing has a reputation for high quality and low prices. Aeropostale also has 46 “P.S. from Aeropostale” stores, which are aimed at seven-to-12-year-old elementary-school students. In the quarter ended July 31, 2010, sales rose 9.2%, to $494.7 million from $453 million a year earlier. Earnings rose 13%, to $43.6 million from $38.6 million. Earnings per share jumped 23.7%, to $0.47 from $0.38, on fewer shares outstanding. Aeropostale expects its sales gains to continue: In the quarter ended October 30, 2010, the company expects to report 6% higher sales, to $602.8 million from $567.8 million a year earlier. The gain will come from…