Aeropostale shares up on takeover defense report

SAN FRANCISCO (BestGrowthStock) – Aeropostale Inc (ARO.N: ) shares rose 8.7 percent on Thursday after a newspaper report that the U.S. teen clothing retailer had hired Barclays Capital (BARC.L: ) as a strategic adviser to defend against any potential takeover by private equity firms.

The New York Post, citing a person close to the situation, reported that Barclays had been hired and said Aeropostale management wanted the retailer to remain public.

A spokesman for Aeropostale did not return calls for comment.

Long a high-flyer among teen retailers, a fiercely competitive sector in which fickle customers clamor for ever-changing fashions, Aeropostale recently hit a rough patch, underperforming peers such as Abercrombie & Fitch (ANF.N: ) and Zumiez (ZUMZ.O: ).

Sales at Aeropostale stores open at least a year, or same-store sales, unexpectedly fell in November, which included the Black Friday weekend after Thanksgiving that traditionally marks the start of the U.S. holiday shopping seasons.

Abercrombie and Zumiez reported same-store sales gains greater than 20 percent for November.

In recent months, Aeropostale has had to discount its merchandise more heavily to compete with mall promotions.

Factors increasing the appeal of Aeropostale as a takeover target, according to Wall Street Strategies analyst Brian Sozzi, include the recent departure of the company’s Co-Chief Executive Mindy Meads, its low price to earnings ratio compared to peers, and the nascent chain P.S. from Aeropostale, which is viewed as a growth engine.

Thomas Johnson is now the sole CEO.

Aeropostale trades at over 9 times estimated fiscal 2011 earnings, below that of Abercrombie, at 28 times, and American Eagle, at over 14.

“The reason to stay public reflects management’s belief the company could command a greater valuation over the long term, rather than accepting an opportunistic bid by a PE house,” Sozzi wrote in a note to clients.

New York-based Aeropostale operates over 1,000 stores in the United States and Canada, including its smaller P.S. from Aeropostale chain for kids.

Aeropostale shares closed $2.05 higher at $25.62 on the New York Stock Exchange.

(Reporting by Phil Wahba in New York, Alexandria Sage in San Francisco and Sakthi Prasad in Bangalore; Editing by John Wallace and Richard Chang)

Aeropostale shares up on takeover defense report