(Updates to discuss how executive changes are expected to effect company. Includes analyst comments and updated stock price.)
By Karen Talley
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Aeropostale Inc. (ARO) is expected to make a smooth transition despite its longtime chief executive stepping down from the teen retailer, as it fills the slot with two executives that have been key to its turnaround.
Mindy Meads, who also serves as president and merchandising chief, and Chief Operating Officer Thomas Johnson are taking the co-chief executive spots the company created to fill the post held since 1996 by Julian Geiger, who is stepping down at year-end. Geiger will remain chairman.
Analysts say the move has been in the works since Meads was hired in 2007 to help Aeropostale recover it cache with teens after a bumpy period.
Meads "has been the visionary behind the merchandise direction," while Johnson "led operations and helped create the new store format," said Roxanne Meyer, retail analyst at UBS Investment Research. "Additionally, the two really took the reigns on the incubation of the new kids concept," PS from Aero.
Aeropostale, with its low prices, has consistently been posting some of the best sales and profits among retailers during the recession, and Meyer indicated the situation should not change. She sees continued opportunity for Aeropostale to gain market share and drive further merchandise margin improvement.
Aeropostale's chief rivals include Abercrombie & Fitch Co. (ANF) and more moderately priced American Eagle Outfitters (AEO).
The transition from Geiger, who is now in his 60s, was "well thought out" and allows him "to leave at the top of his game," said Amy Noblin, retail analyst at Pali Research. "Aeropostale is clearly taking market share as it attracts customers interested in fashion with improved value."
Noblin said she is not a fan of co-CEOs because the approach has not had a strong track record and opens the door to "hiccups" given that decision making is not in one person's hands.
But Aeropostale "is very team oriented," giving the structure a much better likelihood of success, Noblin said.
Meads has been president and merchandising chief since 2007. Johnson has been chief operating officer since 2004. Michael Cunningham will fill the president's role held by Meads and also remain chief financial officer. Johnson was chief operating officer and no replacement was named.
Aeropostale shares were recently down 65 cents, or 1.5%, to $42.91. The stock has nearly tripled this year.
-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com