Aeropostale fires official alleged to have conflict

Plugged In

November 09, 2006|By Bloomberg News

NEW YORK -- Aeropostale Inc., a retailer of teen apparel, fired chief merchandising officer Christopher L. Finazzo for not telling the company he was an owner and officer of "entities" linked to one of its vendors.

The lack of disclosure violated Finazzo's employment contract and the company's code of ethics, Aeropostale said yesterday. Aeropostale said it thinks the violations were confined to Finazzo. Chief Executive Officer Julian R. Geiger will fill Finazzo's job while Aeropostale searches for a successor.

"I am shocked and extremely disappointed by what we've uncovered," Geiger said in a conference call. "We anticipate a seamless transition as we search for and bring on a new chief merchandising offer."

Aeropostale said that the issue won't affect its forecast for the third quarter ending Oct. 28 and that the company won't have to restate earnings. Geiger said operations won't be disrupted because the company has decided on inventory and sales plans through the 2007 back-to-school shopping season.

Aeropostale, a mall-based casual apparel and accessories retailer, competes with Abercrombie & Fitch Co. for teen shoppers.

Meredith Love Kent, an analyst with UBS Securities LLC, wrote in a report yesterday that the firing might delay next year's merchandise, which typically takes six to nine months to design and produce.

Aeropostale's shares fell 86 cents, or 2.9 percent, to close at $28.77 yesterday on the New York Stock Exchange. The company operates 727 Aeropostale stores in 47 states, including several in Maryland, and 14 Jimmy'z stores in 11 states.

Details of Finazzo's ownership of vendor South Bay Apparel Inc. weren't immediately available. Finazzo, 50, had been with Aeropostale since 1996 and was was paid $769,000 in salary and bonuses last year. He owns 19,200 shares with a market value of about $569,000, according to regulatory filings.

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