American Apparel narrows its losses
Los Angeles clothier American Apparel Inc. reported improving fourth-quarter and full-year financial results Wednesday but continues to struggle with red ink despite a rise in sales.
But the retailer said it was pleased that it had secured two lines of credit that would give the company more stability, and said it no longer was concerned about its ability to stay in business.
“Now we are working to stabilize the business,” said Dov Charney, American Apparel’s founder and chief executive. “We are getting our groove back.”
For the quarter ended Dec. 31, the retailer reported a loss of $11.2 million, or 11 cents a share, an improvement from the loss of $19.3 million, or 27 cents a share, in the same period a year earlier.
Fourth-quarter sales totaled $157.6 million, a nearly 10% jump from $144 million in the year-ago period.
For the year, American Apparel reported a loss of $39.3 million, or 42 cents a share, compared with a loss of $86.3 million, or $1.21 a share, in 2010. Sales rose to $547.3 million, up nearly 3% from $533 million a year ago.
Charney said improved worker productivity and factory efficiency helped the company slash costs and boost sales.
“In 2010, we had late deliveries and cost overruns, whereas in 2011 we have started to control our manufacturing costs, and we had more timely deliveries out of factories,” Charney said. “Workers were more trained, which allows us to focus on balancing the business altogether.”
The clothing company said Tuesday that it had replaced a $75-million line of credit set to expire in July with an $80-million credit facility that expires in 2015 with Boston-based Crystal Financial.
The retailer also extended the maturity of its second credit facility with investment firm Lion Capital and affiliates to December 2015.
That extra credit means there is “no longer substantial doubt about our ability to continue to operate as a going concern,” John Luttrell, the company’s chief financial officer, said in a statement.
The company has been plagued in recent years by slipping sales and a long string of problems, including illegal immigrant workers and allegations of sexual harassment.
An investigation by the Securities and Exchange Commission into its financial reporting practices was concluded in January without any enforcement action.
Shares of the company climbed Monday and Tuesday on news reports about the new financing and closed Tuesday at $1.02, up 36% from Friday. But shares fell 9.8% to 92 cents in trading Wednesday.
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