Is Aeropostale, Inc. (ARO) One of the Best Companies in America?

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Motley Fool analysts recently culled through an array of data to yield The 25 Best Companies in America, providing a gathering of best-in-class corporations according to stakeholder-friendly factors. Some companies didn’t make the cut, but revealed surprisingly positive elements that many investors may not be aware of. Aeropostale, Inc. (NYSE:ARO) is one of those companies, so let’s take a look at why it almost made the list.

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New York-based Aeropostale, Inc. (NYSE:ARO) is an apparel retailer that peddles fashionable, low-priced clothing to teens aged 14 to 17. Its P.S. for Aeropostale brand addresses the four- to 12-year-old age group. In the 1980s, Aeropostale originated as a men’s brand at Macy’s, and the department store company opened the first stand-alone, mall-based Aeropostale store in 1987. Aeropostale went public as its own entity in 2002.

The company’s core values include four categories: integrity (do the right thing, be open, honest, and ethical); respect (respect customers, employees and partners; honor our heritage and embrace the future); teamwork (communicate and collaborate; be accountable; empower and encourage each other); compassion (recognize needs; show heart; give, acknowledge, and reward contributions).

The case for Aeropostale
Aeropostale, Inc. (NYSE:ARO) has an interesting not-for-profit program called Aero Cares, which is a fund set up to help employees who experience financial hardship. Aeropostale employees contribute to the fund for their fellow workers. In addition, Aeropostale crept onto Fortune’s 100 Best Companies to Work For list at number 97 this year; one reason is a “teen advisory board” through which its workers can make recommendations to management.

Customers: Unlike many teen retailers, which would prefer their young customers to blow their babysitting money (or their parents’ bank accounts), Aeropostale is out to provide stylish but affordable, options.

Shareholders: In five years, Aeropostale, Inc. (NYSE:ARO)’s growth rate has fallen by 7.62%, although its total revenue growth has increased 10% in that time frame. Its median return on capital has been 49.4%. Although Aeropostale was one of the few retailers that did well during the recessionary period immediately after the financial crisis, its margins began eroding due to higher promotional activity and higher product costs, among other things. In fiscal 2011, business continued going awry,  complete with a decrease in revenue, and a precipitous drop in annual profit.

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