By Olivia Oran
NEW YORK, Feb 10 (Reuters) - Aeropostale Inc isconsidering raising capital from private equity firms as thestruggling teen retailer evaluates various ways to shore up bothits balance sheet and its share price, four people familiar withthe matter said on Monday.
Aeropostale, which has reported losses for four straightquarters, faces pressure from investors to sell itself and isworking with investment bank Barclays Plc to study itsoptions, the sources said.
If the company decides to raise capital, it may choose to doso in the form of a private investment in public equity (PIPE)transaction of a few hundred million dollars, some of the peoplesaid.
A PIPE transaction is often used by small and mid-capcompanies that may have difficulty raising capital in publicmarkets. Private equity firms involved in the deal willtypically get stock at a discount to the public marketvaluation.
The situation remains fluid, and Aeropostale is consideringother options that may include a sale of the entire company, oneof the people said.
All the people requested anonymity because the situation isprivate. Aeropostale was not immediately available for comment.Barclays declined to comment.
Retailers like Aeropostale, Abercrombie & Fitch Co and American Eagle Outfitters Inc, which focus onselling apparel to teenagers, are struggling to keep up with thechanging tastes of young shoppers.
Disappointed with Aeropostale's performance, investors havedriven the company's shares down 50.3 percent in the last 12months to their lowest levels since 2003. The Standard & Poor's500 Index has risen 19 percent in the last year.
The company has also been burning through cash quickly.Aeropostale had working capital of $166.7 million as of Nov. 2,down from $193.9 million on Aug. 3, while its cash fell to $68million from $100.3 million. It also has a $175 million creditfacility it has not drawn on.
For the quarter ended Nov. 2, Aeropostale reported a netloss of $25.6 million, or 33 cents per share. Sales fell 15percent to $514.6 million, below the analysts' average estimateof $520.2 million.
Activist investor Crescendo Partners in November urgedAeropostale to sell itself.
Private equity firm Sycamore Partners, which is run byretail veteran Stefan Kaluzny, separately took an 8 percentstake in Aeropostale in September, becoming its third-largestshareholder.
Sycamore's intentions for its investment still remainunclear. The firm may ultimately try to buy the entire companyor may just want to pressure Aeropostale to consideralternatives, one of the people said. Sycamore declined tocomment.