That's Sooo 2007 - Why Aeropostale's Chief Was Ousted

Trendy teen retailer Aeropostale (ARO) cruised through the recession on cheap chic threads while other mall-based rivals were stuck with costly markdowns. Unfortunately, there's only so long you can rest on your laurels when marketing to fickle young fashionistas. In a move that mirrors fashion trends (one day you're in, next day you're out) Aero ousted its co-chief executive officer Mindy Meads just after the retailer announced disappointing earnings and comps for the third quarter.

It's a management decision that seems a little cold blooded given that Meads joined the company in 2007 as president and chief merchandising officer, and steered the clothier's assortment to appeal to cash-strapped teens. But she wasn't totally alone. Thomas Johnson, co-chief executive officer, served with her as the two ascended to the corner office in February. He'll continue solo when she leaves.

Johnson's got his work cut out to find a new way to attract both customers and investors. Starting with the clothing. Aero's become a one-note recently. Walk into any store and immediately see the following: vintage-y graphic tees, outsize-logoed hoodies, floral thermal Henleys, and slouchy lumberjack shirts. Around these "basics" are a revolving (and forgettable) assortment of jeans, sweaters, pjs and accessories. Ho-to-the-hum.

Teens are still facing recession realities. Unemployment for 16-19 year olds is over 26 percent. But they still want to look good. And they don't want to be wearing the same thing they wore when the economy tanked. Aero's design team needs to have a serious talk about new directions in fashion and get drawing â€" effective immediately.

Also, promotional pricing was certainly appealing during the dark days of 2008-09. But in order to make those margins, Aero seems to have skimped seriously on quality. More than one teen I know has told me that the clothes shrink after the first wash, seams unravel, and holes mysteriously appear after just a few wears. It's one thing to play to disposable trends, but it's quite another when you're peddling basics like long sleeved tees and jeans.

Aero's appealed to investors as much as teens while it stole market share from its competitors. After the earnings report and the announcement of Meads' departure, shares took a 12 percent tumble. Part of what made Aero such a Wall Street darling is its strong balance sheet with controlled inventory, good cash flow, and no long-term debt. But that may not be the case for much longer if sales continue to slide.

With a high-octane style injection, Aero's got potential to make a comeback. Management just needs to act fast.