Here are four challenges that Aeropostale has struggled with:
- TEENS DON'T WANT TO LOOK LIKE EACH OTHER: It used to be that teens wanted to dress exactly like their peers and were fixated on sporting anything with a logo from their favorite brands. Not anymore. Teens, inspired by Instagram and the like, are looking to personalize their looks, and prefer to grab items from different stores. That has been a big problem for Aeropostale, whose sales had been driven by logoed merchandise. Aeropostale started to shed its logoed clothing and began focusing on trendy items about three years ago. It teamed up with names like stylish American video blogger Bethany Mota. But its efforts were too little, too late. The new looks never failed to gain traction with shoppers.
- AEROPOSTALE COULDN'T WEAN SHOPPERS OFF PROMOTIONS: Teens like deals and they like to research online before shopping at the stores. But they're also willing to pay full-price for something they covet. However, Aeropostale was forced to constantly discount the entire store by as much as 70 percent off because they couldn't get shoppers to buy the clothes. "They were too caught up in the promotions," said Ken Perkins, president of Retail Metrics, a retail research firm.
- THE CHANGING MALL: Aeropostale and other retailers benefited from being at the epicenter of where teens shop: the mall. But increasingly, kids are shopping on their smartphones and going to the mall for specific items, not just to roam around. And a rash of bankruptcies of mall-based retailers have left some holes and hurt traffic at the shopping centers, says David Tawil at Maglan Capital, a hedge fund that focuses on distressed securities. That's hurt Aeropostale, which is now closing 113 of its 739 U.S. stores, or 20 percent of its store base. As of early January 2014, it had 1,100 stores. Analysts also say Aeropostale hasn't done enough to make their stores more exciting to shop. And some believe Aeropostale will need to close even more stores to restore profitability.
- INTENSE COMPETITION: Teens are buying their clothing and accessories at lots of different places, from Forever 21 to off-priced stores like TJ Maxx and online. And the competition is only getting fiercer. Amazon.com is quietly expanding its private-label fashion business, while teen stores face new rivals from overseas. United Kingdom-based Primark, which sells trendy cheap items like $7 jeans, made its first foray last year in the U.S.