American Apparel Reports Losses; Charney Files Lawsuits
The company’s wholesale division, which serves the advertising specialty industry, experienced slight year-over-year growth of 0.6% in Q1, increasing sales to $49 million versus $48.7 million in 2014. Total net sales for the company fell to $124.3 million from $137.1 million a year earlier for a 9% decrease. Retail sales decreased 12% for a total $37.3 million.
Schneider said that the company has “begun the arduous but vital task of reorganizing and restructuring a number of critical business processes,” including product development, operational and financial planning and much more. “We are dedicated to this process and in the early stages of the strategic turnaround that will require time,” she said.
The CEO told the LA Times that the company could potentially sell up to $10 million in common stock shares to use for capital and general corporate expenses. Last month, American Apparel laid off 180 employees, mostly in its manufacturing operations, in an effort to boost profitability. In its quarterly earnings statement, the company reported a decrease of $8.6 million in operating expenses compared to the same period last year.
While the firm tries to regain its financial footing, its ex-CEO Dov Charney, a native of Canada, continues to make headlines, seeking millions in damages. Earlier this month, Charney filed a lawsuit against American Apparel, accusing the company and its chairwoman Colleen Brown of defamation and false light, according to a public filing. The new suit echoes another one that Charney filed this month against Standard General for damages of at least $30 million. The hedge fund had loaned money to Charney last July that allowed the American Apparel founder to boost his ownership of the company in a bid to reclaim his CEO position.
Charney was terminated in December by American Apparel’s board of directors for alleged misconduct and violations of company policy. The suit accuses Standard General of defamation and claims the investigation was directed by American Apparel’s board with the intent to “manufacture” reasons to fire him. “The Charney ‘investigation’ was a sham, a witch hunt, a whitewash designed [by Standard General],” alleges the lawsuit. In a statement, Standard General responded that “Charney and his associates continue to file frivolous, meritless lawsuits at a breakneck pace.”
Gildan Q1 Sales Rise Sharply
In Q1, Gildan also said it used $108 million of cash to finance capital expenditures and seasonal working capital requirements. Investments included new yarn-spinning facilities in the U.S. and the expansion of the company’s printwear distribution center in Eden, NC. The company did, however, announce earlier this month that it will close a Buffalo-area plant, eliminating about 80 jobs. The layoffs are set to go into effect starting June 1. Gildan is providing employees severance packages and help finding new jobs.
In its outlook, Gildan reaffirmed its 2015 forecast for consolidated net sales of approximately $2.65 billion. Analysts generally expect the company to report fiscal year earnings of $1.54 per share on revenue of $2.67 billion.
Factory Fire Kills 72 Workers
Investigators have not released an official cause of the fire, although initial reports indicate the blaze may have been set off from welding work on the factory’s gate. It appears sparks ignited chemicals contained in nearby containers. More than three dozen officers from the Philippine National Police’s forensic examination team have joined the evidence recovery process.
“Someone will definitely be charged because of the deaths,” said police Deputy Director General Leonardo Espina. “It doesn’t matter if it’s an accident, people died. Many of those retrieved were reduced to skulls and bones.”
Since the fire, labor activists have staged protests in Manila, demanding an investigation of the factory owners. The protestors have specifically questioned whether the factory had been properly inspected and if the facility had enough fire exits and fire extinguishers. Reports suggest Kentex was compliant with safety requirements as of September of 2014, its latest inspection date.
The fire was one of the most deadly in Philippine history. In 1996, 162 people died in a disco club fire in a suburb of Manila. In 2001, a hotel fire in Quezon City killed 75 people.
Montreal Considers Single-Use Plastic Bag Ban
The idea of a single-use plastic bag ban in Montreal comes as Quebec has already been quite successful at reducing use of the bags. Consumers in the province have dramatically cut back on their use of plastic bags due to public awareness campaigns as well as a five-cent charge brought on by local retailers. People in Quebec now use roughly a billion bags a year, less than half from a decade ago.
Montreal’s consideration of a single-use plastic bag ban comes after many large cities in the United States have already passed similar measures. In California, cities such as Los Angeles and San Francisco have enacted plastic-bag-limiting legislation, and the state government earlier this year made California the first state in the U.S. to pass a similar law. However, that measure is now on hold until a public vote about the law can take place in 2016. Other large cities in the U.S. such as Chicago, Seattle and Austin have already passed laws that restrict retailers from handing out single-use plastic bags to their customers. In Canada, Toronto tried and failed in 2012 to enact similar legislation, while a handful of smaller municipalities have been successful.
The Montreal city council will continue to consider proposals through June and is expected to make official recommendations later this year.
Debco Partners with ReturnMe
“Initially, ReturnMe reached out to us and asked if the marriage between our distribution network and their technologically savvy service could potentially be a fit,” said Alex Morin, executive vice president of sales & marketing at Debco. “But in reality, I’d been very interested in ReturnMe’s service since I happened, by chance, to sit next to the owner of ReturnMe on a flight back from Vegas a couple of years ago. It seemed that the timing was finally right for this type of partnership.”
Each ReturnMe tag on Debco products includes a toll-free number that can be called in order to ship a missing item to its owner, free of charge.
“We’ve positioned ourselves as a thought leader and an early adopter of innovative concepts,” said Morin. “We have an extremely informed and knowledgeable distributor network that sees the strength in the ReturnMe proposition. The partnership will enhance Debco’s product offering and continue to push us in the direction of innovation and creativity. For ReturnMe, it should add considerable opportunity to broaden its audience while spreading the word about their unique service.”
Safeguard Acquires Fontis Solutions
Fontis, which is based in Irvine, CA, was founded in 1983 as Image Printing Solutions and adopted the Fontis Solutions name in 2011. The company, a member of Counselor’s Best Places to Work list for the past two years, is a print services provider that also sells promotional merchandise, online communications and technology services. The Print Services & Distribution Association (PSDA) estimates that Fontis recorded total 2014 revenues of $40 million.
Safeguard, a subsidiary of publicly owned Deluxe Corporation (NYSE: DLX), ranks number 32 on Counselor’s Top 40. The company does more than $40 million in annual North American promotional products sales.
iPROMOTEu Joins Constant Contact Partner Program
“Distributors often do not have time to maintain consistent contact with all of their customers,” said Cliff Quicksell, director of marketing for iPROMOTEu. “With the launch of the iPROMOTEu Constant Contact program, our Affiliates have access to yet another tool to help them grow their businesses. This new program enables them to keep in touch with existing customers as well as foster new relationships. We are already seeing amazing results and I am excited for the future of this partnership.” For more information, visit www.ipromoteu.com.
4imprint Awards Grants to Nonprofits in US and Canada
“The creativity with which these organizations use promotional products to make an impact is a testament to their passion for these communities and causes,” said Kevin Lyons-Tarr, CEO of 4imprint. “It is an honor to be able to support them in this small way.”
4imprint is now accepting applications for its 2015 one by one program. Any 501(c)3 organization, registered Canadian charity, school or religious organization is eligible to apply. Visit http://onebyone.4imprint.com for more information.
Akran Marketing Warns Against Scammers; Akran Foundation Sends Donations to Nepal
“Over the years I have come to specialize in identifying fraud and its prevention,” said Agarwal. “From orders of high-value items for resale on the black market, such as blank USBs, blank T-shirts and electronic items using fake credit cards, to fake emails from banks to PayPal, one needs to be vigilant these days. We are all proud to be well-connected with industry associations so that we can protect others from dishonest individuals and prevent them from becoming victims of such nefarious people.”
In addition, Akran Marketing will partner with its affiliated Akran Foundation to donate $10,000 in cash and clothing to those in Nepal affected by the recent earthquake and aftershocks. The 7.9 magnitude earthquake struck on April 25 near the capital city of Kathmandu. It’s the worst earthquake the region has experienced in over 80 years, and it’s feared that more than 8,000 people have been killed.
“Children account for nearly half of Nepal’s population,” said Agarwal. “I know that you share our compassion and concern for children and their families in the affected region. Every Canadian business needs to respond to this tragedy by contributing what they can to bring aid and expertise. They urgently need our help.” For more information, visit www.akranfoundation.com.
ASI Corrects Supplier Member Number for ATTRACTION
Spector & Co. Appoints Lavina Da Silva
PWS Welcomes Craig Ross
BRING YOUR END-BUYERS TO THE ASI ROADSHOW IN JUNE!
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