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Aeropostale: What Do Teens Think?

Aeropostale (NYSE:ARO) is a retailer that has been battling with declining sales and margins over the past several years. When I published my PRO article called Aeropostale: You Don't Need To Win Very Often To Come Out Ahead back in December last year, the coverage of the company consisted mostly of extremely negative headlines. Lately my fellow contributors don't hate the company as much anymore as evidenced by Is It Too Early To Take A Run At Aeropostale? and Aeropostale Rallies Massively: Should You Buy The Turnaround Story?. Important changes are taking place at the company level and these are showing up in the financial results. One of the key problems I identified (emphasis added):

Margins deteriorated much more in the past two years, than can be explained by operating leverage dynamics. It makes sense margins deteriorate when a company's economies of scale shrink butAeropostale achieved much better margins than it does today, at a far lower sales base. This is illustrated in the graph below: 

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