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American Apparel reports bigger loss, SEC investigation

American Apparel's losses widen in fourth quarter; SEC also opens investigation

American Apparel Inc. reported a bigger loss in the fourth quarter, a sign of continued struggles at the retailer as its new chief executive leads a turnaround effort.

The company also said Wednesday that the Securities and Exchange Commission is looking into issues that had come to light during the board's investigation into fired Chief Executive Dov Charney's conduct.

Allegations included that Charney had misused company apartments and allowed a blogger to post nude photos of a woman who was suing American Apparel. Charney was fired in December after the investigation was completed. His lawyer, Patricia Glaser, has denied the allegations and accused the company of firing Charney without cause.

The SEC is looking into whether any laws were violated, American Apparel said.

The Los Angeles-based company said its net loss was $28 million, or 16 cents a share, in the three months ended Dec. 31. That's compared with a loss of $20.8 million, or 19 cents a share, in the same period a year earlier.

Sales fell to $153.5 million, down 9.2% from $169.1 million in the year-earlier period. U.S. retail sales fell 9.9% to $49.7 million, while wholesale slid 3.2% to $52 million.

Paula Schneider, who took the helm in January after Charney was fired in December, said in an earlier interview that she was focused on improving operations at the company and bringing more structure to the retailer.

"We remain focused on putting the right processes and systems in place, such as a rigorous forecasting process and disciplined bottom-up budgeting -- so that we can better leverage American Apparel's strong brand," she said in a statement Wednesday.

Among the changes: hiring experienced executives to head the digital and marketing teams, and cutting down on the number of styles being offered this fall.

The retailer has a long way to go before its fortunes are reversed. In five years, the company has lost nearly $340 million and its debts total more than $200 million.

American Apparel suffered months of turmoil last year after the board suspended Charney as chairman and ultimately fired him as chief executive, citing misuse of company funds and inappropriate behavior with employees.

Twitter: @ByShanLi

Copyright © 2016, Los Angeles Times


6:13 p.m.: This story was updated to include a comment from Charney's lawyer.

This story was originally published at 4:34 p.m.