Troubled American Apparel’s woes got deeper in Q3 as the retail giant reported a markedly wider loss as sales recorded their biggest drop in …
Troubled American Apparel’s woes got deeper in Q3 as the retail giant reported a markedly wider loss as sales recorded their biggest drop in almost four years. Its shares, which are down 38% in the year to date, gained 0.6%, trading at $0.77 in Monday’s extended session. The quarter’s net loss grew to $19.2m/$0.11 cents a share from a loss of $1.5m/$0.01 a year ago. However, the most recent period included a $5.3m charge for legal disputes and the investigation into the conduct of its founder and former chief executive Dov Charney, as well as $3.1m for severance costs. Results also included a charge of $4.4m for a customs duty settlement with Germany.
Adjusted ebitda rose to $13.5m from $9.8m a year ago on lower costs.
Revenues fell 5.3% to $155.9m, the biggest dip since the final quarter of 2010. Same-store sales also fell 7% and online sales dipped 5%. Lower retail and online sales were partially offset by increased wholesale sales, it noted.
Analysts had expected a loss of $0.04 per share on revenue of $162.4m.
Interim CEO Scott Brubaker said: “The strength of American Apparel’s operating model is evident in the 38% year-over-year improvement in adjusted ebitda. We are proud to have achieved this growth during a period of company-wide operational restructuring and in a challenging macro-economic environment for retailers. I am encouraged by these results, and am optimistic about the future prospects of the business.”
For 2014, the retailer forecast $40m-$45m in adjusted ebitda.
The company has been without a permanent CEO since June when founder Dov Charney was removed by the board following accusations of alleged sexual-harassment and misuse of corporate funds. However since then, Charney has increased his ownership stake to more than 40%.
· American Apparel is negotiating a $15m unsecured credit agreement with Standard General, expected to be completed in Q4. Currently, it has $8.4m left to borrow from an ongoing credit facility.