American Apparel Posts Quarterly Results
Despite Loss, It's An Improvement Over 2013's Q2
In a delayed second-quarter earnings report, Top 40 supplier American Apparel (asi/35297) announced a larger-than-expected loss in net sales of $16.2 million and flat Q2 revenues of $162 million. This week’s filing follows a preliminary report released last week that showed a $15 million quarterly loss. Sales at retail stores open for at least one year fell by 6% and online sales decreased 3%. Meanwhile, revenue from wholesale operations – which includes promotional apparel sales – increased sharply by 9% in Q2.
“There was a lot of cold weather and the [apparel] industry as a whole is challenged,” said Dov Charney, the supplier’s recently-ousted CEO, in an interview with Bloomberg TV. “We’re going to have to take market share from competitors to grow sales.”
While American Apparel is still losing money, the Q2 net sales results are an improvement over the $37.5 million loss the California-based firm reported in the second quarter of last year.
Charney maintained the firm’s latest 2014 results show he’s fit to be the company’s CEO going forward. Charney was dismissed two months ago amid allegations of misconduct and is fighting to regain his role with American Apparel. Three American Apparel directors will review a company-initiated investigation to determine a recommendation for Charney’s future with the firm he founded.
Charney has aligned himself with hedge fund Standard General, which provided $25 million in financing and recently took a 44% ownership stake in the company. On Monday, American Apparel said it is working “as soon as practical” to strike a credit agreement with Standard General and at least one foreign subsidy. The company must pay bondholders $13.5 million in interest in October.
American Apparel previously delayed its Q2 earnings statement to give new board directors time to review financials. Ranked by Counselor as the 14th largest supplier in the industry, American Apparel reported 2013 North American ad specialty sales of $99.2 million, a year-over-year increase of 2.5%.