Aeropostale is cutting 13% of its corporate headcount, or 100 jobs, and trying to convince existing staff to stay on board by redistributing the CEO's stock options —which are currently worthless.
The company announced the cuts in a release today. While Aeropostale said it's on track to hits previous forecasts for its net and operating losses, that excludes some pretty major components, including "the impact of the aforementioned headcount reductions" and "store impairments, accelerated store closure costs, lease buyout costs, or real estate consulting fees."
Aeropostale also said CEO Julian Geiger, who returned to rehabilitate the company in 2014, "voluntarily relinquished" one million stock options, which will now be used by Aeropostale for "motivating and retaining other key members of the organization."
While this sounds generous, his options, as per regulatory filings, give him the right to purchase shares for $3.24 each. At Aeropostale's current price of 24 cents a share, the options are currently worthless.
Things could get even worse going forward: Aeropostale has been warned more than once that its stock is is at risk of being delisted from the New York Stock Exchange.
Things have been bad at Aeropostale for some time now. For years, it operated as the cheapest of the "three As" behind American Eagle and Abercrombie & Fitch, but in recent years, it's struggled to remain relevant as teens abandoned logo-driven clothing and flocked to skate-inspired looks and fast-fashion chains.
Since Geiger returned, its rebrand to AERO and efforts to appeal to a 14- to 17-year-old target customer known internally as the "the flirty tomboy" have not been successful. It has also been closing hundreds of stores.
But Geiger has been unflaggingly optimistic in his view of Aeropostale's future. Last March, he said that the back-to-school season would 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." Instead, sales fell 20% in the quarter ended Oct. 31.
In today's release, Geiger said that "the decisions that led to today's actions are a result of our focus on Aéropostale's future, and our goal of returning to profitability."
"We are building upon areas of progress and continue to work to improve our business," he said. "We look forward to discussing our plans for 2016 on our next earnings call."