Two years ago, Aéropostale Chief Executive Officer Julian Geiger shared his view of the adolescent shopper. “The teenager today wants to fit in,” he told analysts. “They want to fit in by wearing things that make them feel safe. If there’s a brand promise to Aéropostale, it’s that the teenager can wear our clothes, go to school, and not be teased or made fun of the way they look.”
It turned out he was wrong. After decades of battling with rivals Abercrombie & Fitch and American Eagle, brands that realized normal didn’t sell anymore and sought to reposition themselves, Aéropostale doubled down and ended up the ultimate loser in the teen fashion wars. More broadly, the bankruptcy of this giant of the American mall is a cautionary tale for other retailers, like Gap Inc. and its Banana Republic unit: Not only our teenagers happy to stand out these days—so are their parents.
Back in 2011, Aéropostale was riding high. Annual sales hit a peak of $2.4 billion and the company was profitable. Suddenly, it fell apart. Fickle teens didn’t want to be walking billboards of logo apparel. They flocked to trendier shops like Forever 21 and H&M to buy clothes with more personality. No one wants to be teased, sure. But that won’t sell clothes when kids think being ignored is worse.
Nowhere to turn
Aéropostale was caught in a trap. Teens didn’t want to wear logos anymore, but without its logo, Aéropostale lost its identity. Justina Sharp, a 19-year-old fashion blogger who runs the site A Bent Piece of Wire, said that once logos went out of style, there was nothing unique about Aéropostale that appealed to the teen.
“Aeropostale seems like somewhere your mom takes you for back to school shopping,” said Sharp. An Aéropostale spokesperson didn’t immediately provide a comment.
While A&F and American Eagle also strained to right their ships, Aéropostale was sinking. The New York-based company shed almost 40 percent of its sales in five years—nearly a billion dollars in revenue. Shares fell almost 98 percent, and the retailer managed to post just one quarter of positive comparative sales since its peak back in 2013. Finally in May, Aéropostale filed for Chapter 11 bankruptcy protection, and shut down more than 150 stores.
The collapse ended an era of strife for Aéropostale. In the early 2010s, as teens began to shun logos, the company refused to shift with them at first. Seen as a cheaper alternative to A&F and its sister brand Hollister, which were surging to new highs in the mid and late 2000s, Aéropostale had lower margins and was the most exposed. As more teens drifted away, the company had little room to maneuver, and the moves it did make ended up making things worse.
High school uniform no more
The brand got its start almost 30 years ago as a uniform for preppy kids in Gen X high schools. Like its rivals, Aéropostale’s branded clothes signaled the wearer to be cool, conformist, and therefore acceptable in the suburban American high school. Now, with its name drained of that power, what else could it offer teens? Executives tried to copy the fast-fashion companies, like Zara and H&M, by offering similar, logo-less styles. It didn’t work, and even worse, the clothes were so different they pushed away the loyal shoppers who had stuck around. In its bid to survive, Aéropostale’s clothes lost their common design aesthetic, said Adheer Bahulkar, a partner at consulting firm A.T. Kearney’s retail practice. The brand’s identity was lost.
“There was a knee-jerk rush to reinvent themselves,” said Bahulkar. “People who loved their product couldn’t recognize it anymore.”
In 2014, Geiger, the former CEO of cupcake shop Crumbs, was brought on to save Aéropostale. He tried to find a happy medium, selling fashion styles alongside the Aéropostale hoodies and T-shirt staples that had been typical of the label for the past decade. He rebranded the retailer Aero, with ads that promised teens that “We’ve changed.” Executives said they were trying to attract the “flirty tomboy,” a 14- to 17-year-old girl. On an earnings call early last year, Geiger was full of optimism. “Back-to-school will be a seminal period in which we will all see just how far we have come in the resurrection of one of America’s great young brands,” he said.
Back-to-school was a disaster. Aéropostale filed for bankruptcy before summer vacation.
Throughout Geiger’s unsuccessful attempt to save the company, distractions were rampant. His former deputy was found guilty of fraud for bilking the company of millions of dollars. Management had disagreements with lender Sycamore Partners, a private equity firm that acquired a chunk of the company in 2013. Later, in bankruptcy court, Aéropostale accused Sycamore of attempting a “loan to own” scheme to purposefully cause defaults. The judge found no wrongdoing.
One last chance
Aéropostale was desperately looking for a white knight to help it out of court protection. Initial bidders only wanted to liquidate. In the end, mall owners stepped in to save their tenant and keep its stores alive. In an uncommon move, the consortium of investors that bought Aéropostale included Simon Property Group and General Growth Properties, landlords that house 237 of the distressed retailer’s clothing shops.
Whether the deal will go through, and how the brand may be overhauled to appeal to teens or even adults, remains to be seen. But Aéropostale should take solace in the experience of its rivals.
American Eagle’s recovery is being led by a newfound focus on its denim. By recasting its jeans, which it was already known for, as the prime draw, the label has found a new identity. A&F is steering its flagship name upstream, adding more sophistication to its clothes with the hopes of drawing in older customers. So far, it’s been able to stem the bleeding.
Jamie Salter, the CEO of Authentic Brands Group, the brand management firm tasked with Aéropostale’s resuscitation, said he’ll look to “grow the Aéropostale brand on a global scale.” How that will happen is the big question, and not just for Aéropostale. America’s biggest clothing brands are trying to figure it out, too.