American Apparel Q2 Loss Widens

Supply chain costs, refinancing take chunk out of bottom line as sales gain.

Dov Charney

American Apparel Inc.’s second-quarter sales showed some pep, with comparable revenues up 7 percent, but the firm’s bottom line was bogged down by supply chain tweaks and charges associated with its refinancing.

This story first appeared in the August 13, 2013 issue of WWD.  Subscribe Today.

Net losses widened in the second quarter to $37.5 million, or 34 cents a share, from $15.3 million, or 14 cents, a year earlier. The company recorded charges of $32.1 million resulting from its April refinancing, which allowed the firm to repay a loan from Lion Capital. The quarter was also weighed down by $2.9 million in costs associated with steps taken to improve supply chain operations, including a move to a new distribution center.

The firm’s adjusted earnings before interest, taxes, depreciation and amortization rose to $7.9 million from $7.6 million a year earlier. Sales for the three months ended June 30 increased 8.5 percent to $162.2 million from $149.5 million.

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Dov Charney, chairman and chief executive officer, said the company was “executing at the store level and in our manufacturing facility, and customer demand of our offering remains strong. While the transition to a new distribution center and other supply chain initiatives negatively impacted the quarter, we are committed to making the necessary investments to reduce costs and improve our operating efficiency over the longer term.”

Shares of American Apparel fell 3 percent, or 6 cents, to $1.93 in after-hours trading Monday, following the quarterly update.