By Alexandria Sage

SAN FRANCISCO, May 20 (Reuters) - U.S. teen retailer Aeropostale Inc (ARO.N) on Thursday 20 May posted a 43 percent jump in quarterly net income that beat Wall Street estimates, helped by a double-digit sales increase and fewer markdowns.

Photo: www.aeropostale.com

Shares rose 1.5 percent after hours.

The seller of casual, colorful clothing from logo and graphic T-shirts to hoodies and shorts, relies on planned promotions to drive traffic into stores and low prices to appeal to teens on a budget.

The company, which said it was well positioned for the upcoming back-to-school season, posted first quarter net income of $45.4 million, or 48 cents per share, from $31.7 million, or 31 cents per share, a year earlier.

Analysts, on average, had been expecting earnings of 46 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 14 percent in the quarter to $463.6 million, while same-store sales, a key measure of retail performance, rose 8 percent.

Strength in knit tops and shorts drove the increases. Men's same-store sales rose 10 percent and women's rose 7 percent, executives said.

The company has managed to take market share from competitors like Abercrombie & Fitch (ANF.N) and American Eagle Outfitters (AEO.N) due to lower prices. At the same time, the company has been adding higher-margin fashion items to its merchandise mix to attract trendier consumers.

Aeropostale has been working on getting clothing from factories to stores faster, while having the right styles and sizes in stock. It has been boosting its e-commerce business at the same time.

KIDS AND REMODELS

The company also highlighted its newest brand for kids, P.S. from Aeropostale, saying results exceeded the company's expectations. It did not provide specific results for the chain.

"We continue to believe there is a significant opportunity to gain market share in the kids market," said co-Chief Executive Mindy Meads.

Aeropostale plans $90 million in capital expenditures for 2010 -- up from an earlier target of $80 million -- including a 14,000 square foot store in New York's Times Square, some 40 store remodels and about 30 P.S. from Aeropostale stores. That sum also includes technology investments.

Same-store sales increases at remodeled stores are double the average, co-CEO Thomas Johnson said. He added that the market could support at least 500 P.S. stores.

Meads called denim a "big opportunity" for the back-to-school season, adding those sales were basically flat in the year-ago season.

Aeropostale forecast second-quarter earnings to range between 45 cents to 48 cents. Wall Street has been expecting earnings of 47 cents per share.

Shares rose 1.5 percent to $27.71 after closing at $27.29, down 1.4 percent, in regular trade. (Reporting by Alexandria Sage, editing by Leslie Gevirtz and Bernard Orr)