Thanks to new rent-reduction deals with mall landlords, bankrupt teen apparel retailer Aeropostale will be able to keep 400 of its North American stores open — about 75% more than previously estimated — the New York Post reports.
Rents will be reduced at 171 Aeropostale stores, saving some 5,300 jobs, according to new reports.
Earlier this month, a bankruptcy court approved the $243.3 million sale of Aeropostale to a consortium of entities led by landlords Simon Property Group and General Growth Properties, and also including liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC, and licensing firm Authentic Brands Group.
After falling far behind its teen apparel rivals and becoming embroiled in disputes with major investor Sycamore Partners, Aeropostale's days appeared to be numbered. Sycamore ultimately won the right to leverage $150 million owed by Aeropostale to bid at the bankruptcy auction, and would have forced the retailer to liquidate had it prevailed in court. Instead, Aeropostale has emerged with financial support, reduced rents and another chance to succeed.
The Aeropostale brand will now live on across more than 700 retail sites worldwide, including approximately 300 locations in Latin America, Europe, the Middle East and Southeast Asia.
The slimmed-down Aeropostale still must make the changes it has failed to accomplish so far, and shift away from logo-centric clothing that is no longer in fashion. The retailer must also reconcile its purported customer base with the shoppers who actually buy its clothing: While Aeropostale features older teens in its marketing, it tends to sell to tweens or, more accurately, their parents.
But Sandeep Mathrani, CEO of landlord General Growth Properties, maintained in a statement that the retailer’s strengths have made the consortium’s support a good bet.
“Aeropostale has significant brand equity and the go-forward portfolio of stores generates more than $1 billion in global retail sales, over $800 million of which is from the U.S.,” Mathrani said. “The entity is financially secure and well capitalized, and we are very pleased that thousands of jobs will be preserved.”