Stronger sales were insufficient to offset higher interest expense and accounting items as American Apparel Inc. more than doubled losses in the third quarter.
In the three months ended Sept. 30, the net loss escalated to $18.5 million, or 18 cents a diluted share, from a loss of $7 million, or 7 cents, in the year-ago quarter. Sales grew 15.1 percent, to $162.2 million from $140.9 million, as comparable-store sales were up 20 percent and comparable online sales up 21 percent.
Gross margin declined to 52.5 percent of sales from 53.2 percent in the 2011 quarter.
While interest expense was up 18.4 percent to $10.5 million from $8.8 million a year ago, the biggest toll on the bottom line came from a $13.3 million loss tied to the increase in the fair market value of outstanding warrants based on changes in the company’s stock price. Although the warrants will convert to equity when exercised, the loss on them comes against a gain of $6.1 million in last year’s quarter.
Stripping out interest and warrant liability along with other items, the company said consolidated adjusted earnings before interest, taxes, depreciation and amortization more than doubled to $13.3 million from $6.4 million a year ago.
“EBITDA performance for the 12 months ended Sept. 30, 2012, was $28 million or double that reported for the full year in 2011,” said Dov Charney, chairman and chief executive officer of the financially troubled vertical retailer. “As we improve store productivity and aggressively grow our online and wholesale businesses, we expect operating expense leverage will allow us to continue to significantly grow EBITDA performance.”
However, the company lowered its projections for full-year EBITDA to a range of $36 million to $40 million based on the impact of Hurricane Sandy and investments in advertising and store technologies. The earlier guidance was for EBITDA of $36 million to $44 million.
Madonna turns 59 today, marking another year of show-stopping, one-of-a-kind bold looks from the singer. To celebrate, we took a look at the superstar's most memorable fashion moments. Here, Madonna sits front row at Versace's spring runway show in 1995. See more exclusive photos from the #wwdarchive on WWD.com. #wwdeye (📷: Cédric Dordevic)
WWD asked a handful of creative directors to evaluate the September covers of leading women's fashion magazines. How do they think the covers this year compare with years gone by, and what do they say about the current status of the publication? Link in bio. (GIF by @hypebreast)
"Stephen King is such a master, but I don't like being scared - there's enough that's really scary. How about the morning's news?" says Holland Taylor in an interview with WWD. See what else the actress said about starring in the TV adaptation of King's thriller "Mr. Mercedes" on WWD.com. #wwdeye (📷: @jgreenery)