American Apparel’s losses widen as sales shrink in the second quarter
American Apparel lost about $19.4 million, or 11 cents a share, in the three months ended June 30, compared with a loss of $16.2 million, or 9 cents, a year earlier.
American Apparel Inc. revealed plunging sales, a widening loss and shrinking cash in the second quarter -- all bad signs as the clothing maker fights to stay afloat.
The Los Angeles manufacturer said its net loss was about $19.4 million, or 11 cents a share, in the three months ended June 30. That compares with a net loss of $16.2 million, or 9 cents, a year earlier.
Sales fell 17% to $134 million from a year earlier.
These preliminary estimates were released when American Apparel filed a notice with the Securities & Exchange Commission stating that it must delay filing its quarterly report.
The delay, American Apparel said in its filing, was due to potential noncompliance of certain agreements for a revolving credit facility from lender Capital One. American Apparel said it was negotiating with Capital One for a waiver on those covenants.
The company also reported further financial troubles.
American Apparel said Tuesday it “currently does not have sufficient financing commitments to meet funding requirements” for the next 12 months without raising more money.
“There can be no assurance that it will be able to raise such additional capital or refinance its obligations,” the filing said.
The clothing maker has been rocked by one crisis after another since the board fired founder Dov Charney as chief executive and chairman last year, alleging misconduct.
It is working to turn around its operations under Paula Schneider, who took over the reins as chief executive this year. It has laid off workers and closed stores, but continues to lose money.
American Apparel and Charney have been trading lawsuits, and the company noted Tuesday that fees for litigation and professional fees jumped to $3.6 million in the quarter from $1.3 million in the year-earlier period.
American Apparel recently reported that it has renegotiated with Alameda Square, the owner of the two buildings it leases in downtown Los Angeles.
The company will keep renting the salmon pink building that houses its manufacturing and corporate offices, according to an SEC filing. But it will vacate the second seven-story building, which American Apparel said was “under-utilized.” That will reduce annual rent by about $2.1 million.
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