A $20 million fourth-quarter loss left American Apparel Inc. with $86.3 million in red ink for the year and continuing doubts about its ability to continue as a going concern, according to the company’s annual report.
The Form 10-K, filed with the Securities and Exchange Commission on Thursday, also said that Lyndon Lea and Neil Richardson, the two directors designated by Lion Capital, had resigned from the board “to allow Lion flexibility in evaluating its options to optimize its investment in American Apparel.” Lion retains the right to designate individuals to the board.
It projected that the company would suffer from a loss from operations and negative cash flow in 2011, as it did last year.
The resignations of the two Lion directors come just days after Dov Charney, the company’s chairman and chief executive officer, spent $2 million of his own money to buy 6 million shares of the company’s stock and convert a $4.7 million personal loan previously made to the company to a combination of 2.1 million shares and the right to acquire another 2.1 million shares at $1.11 should their price reach $3.50. Shares Thursday closed at 96 cents, down 3 cents, or 3.4 percent.
According to his most recent filing with the SEC, Charney holds 44.9 million shares of American Apparel, 62.7 percent of the 71.6 million outstanding listed in the annual report. Lion holds warrants that could be converted at $1.11 a share to 16 million shares of stock, which would dilute Charney’s holdings.
Charney purchased more than 1.1 million shares of his firm’s stock on Dec. 1 for $1.48 a share, or $1.7 million.
In the fourth quarter ended Dec. 31, the troubled Los Angeles-based vertical retailer recorded a net loss of $19.3 million, or 27 cents a diluted share, versus net income of $3 million, or 4 cents, in the final quarter of 2009. Sales declined 8.9 percent to $144 million from $158.1 million in the 2009 quarter as gross margin expanded to 55.6 percent of sales from 55 percent a year ago.
The $86.3 million net loss for the full year translated into $1.21 a diluted share and compared with a profit of $1.1 million, or 1 cent, in 2009. Sales receded 4.6 percent to $533 million from $558.8 million in 2009, while gross margin landed at 52.5 percent of sales versus the 57.3 percent recorded in 2009.
Same-store sales declined 13 percent during the year and 12 percent during the fourth quarter.
The company first noted doubts about its ability to continue as a going concern in August. In Thursday’s annual report, it cited not only results from operations and limitations with cash and credit, but also its 2010 sales results and “worldwide economic conditions and significant increases in yarn and fabric prices.”
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over the top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty