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American Apparel's losses widen in third quarter

American Apparel's losses widen in third quarter
American Apparel reported a bigger-than-expected loss in the third quarter. (Scott Olson / Getty Images)

American Apparel Inc. reported a larger-than-expected loss in the third quarter as the retailer worked to turn around its fortunes after a dramatic boardroom struggle.

The Los Angeles company, which ousted Dov Charney as chief executive in June, said it lost $19.2 million, or 11 cents a share, in the three months ended Sept. 30. Analysts had forecast a loss of 4 cents a share.

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In comparison, the retailer reported a net loss of $1.5 million, or 1 cent, in the same period a year earlier.

Sales fell more than 5% to $155.9 million, down from $164.5 million a year earlier. U.S. sales at both the retail and wholesale segments dropped, and international sales also slid.

American Apparel has gone through severe upheaval since its board voted to remove Charney as chairman and suspend him as chief executive June 18, citing allegations of misconduct and inappropriate behavior with employees.

Since then, the company has replaced most of its board and appointed its first two female directors. In September, American Apparel also hired a new chief financial officer and an interim chief executive in an effort to move beyond the upheaval.

Charney is working as a paid consultant for American Apparel, pending the results of a company investigation into his conduct. His suspension and the internal investigation cost the company $5.3 million in legal and consulting fees in the third quarter.

Discussions with Charney are ongoing, and nothing has been decided yet, according to a person familiar with the situation.

Scott Brubaker, the company's interim chief executive, said American Apparel performed well "during a period of company-wide operational restructuring and in a challenging macroeconomic environment for retailers."

"I am encouraged by these results," he said in a statement Monday. Brubaker pointed to a 38% improvement, to $13.5 million, in a measurement of operating performance known as adjusted earnings before interest, taxes, depreciation and amortization.

American Apparel shares rose 4 cents to 77 cents Monday, before the financial results were released.

Follow Shan Li on Twitter @ShanLi

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