American Apparel Inc., which has yet to weigh in with certified financial results for 2009, delayed the filing of its 2010 annual report because it needs time to complete “reviews and analyses” of results for both years.
This story first appeared in the March 21, 2011 issue of WWD. Subscribe Today.
The firm did say in a regulatory filing with the Securities and Exchange Commission that it expects to register losses for 2010.
Last year, the company’s auditor, Deloitte & Touche, resigned and said the previously reported 2009 numbers could not be relied on. In February, former Old Navy executive John J. Luttrell was named executive vice president and chief financial officer.
But the bare-bones information the company did give in its filing late Thursday made clear that most everything went wrong for American Apparel last year, financially speaking.
The company said net sales were expected to have decreased last calendar year as comparable-store sales waned and the number of doors slid to 273 from 281.
Gross margins are also expected to have decreased primarily due to higher yarn prices and lower labor efficiencies. American Apparel needed to restaff following a federal investigation that led to the firing of 1,500 workers who could not prove they had the legal right to work in the U.S.
Operating expenses are expected to have risen for the year. And the same goes for interest expense, given increased debts to Lion Capital, the firm’s primary lender.
Combined, the company said this leads to a net loss for 2010 versus income in 2009.
That’s another hit for chief executive officer Dov Charney, who owns just over half the firm’s shares and was recently accused in a $260 million suit of using former employee Irene Morales as a sex slave in 2008. American Apparel said Morales previously “acknowledged in writing that she had no pending claims against the company and signed a severance agreement.”
Shares of American Apparel fell 7.8 percent, or 8 cents, to 95 cents on Friday.