A noncash item drove losses deeper at American Apparel Inc. in the first quarter ended March 31, historically the company’s weakest earnings period. The Los Angeles-based vertical retailer posted a net loss of $46.5 million, or 42 cents a diluted share, compared with a net loss of $7.9 million, or 7 cents, in the year-ago quarter.
Net sales in the quarter increased 4.1 percent to $138.1 million, up from $132.7 million a year ago. Comparable-store sales improved 8 percent, including e-commerce, and wholesale sales inched up 1 percent.
American Apparel booked a noncash charge of $23.6 million in the quarter in connection with an increase in the fair value of the 21.6 million outstanding warrants that former lender Lion Capital retains at 75 cents a share. As the company’s share price increases, as it did during the period, the value of the warrants rises and American Apparel books an expense to recognize the increase. RELATED STORY: American Apparel Refinances With Private Bond Offering >>
The company emphasized the charges do not impact the company’s operating performance and do not represent a cash obligation, as the warrants will reclassify to equity once exercised. American Apparel shares closed up 2 cents at $2.02 on Wednesday.
“We have significantly improved our store presentation, responsibly added stores when it was appropriate to do so, improved technology in all three channels, increased inventory productivity and substantially improved the effectiveness of our supply chain operation,” said Dov Charney, chairman and chief executive officer of American Apparel.
Adjusted earnings before interest, taxes, depreciation and amortization amounted to a loss of $700,000 compared with a loss of $2.1 million a year ago. Chief financial officer John Luttrell said the losses were in line with plan, and the company reiterated its full-year EBITDA guidance of $47 million to $54 million for the full year, which assumes net sales between $652 million and $660 million.
“We expect key initiatives in the areas of merchandise planning, supply chain and inventory control to drive further sales and expense improvements for the balance of the year,” said Luttrell.
Gross margin in the first quarter remained unchanged at 52.8 percent from a year ago. Operating expenses increased 4 percent to $83.3 million, related to higher share-based compensation, higher rent expenses and higher radio frequency identification supplies. These were offset by lower store payroll expenses and lower advertising expenditures.
As of May 1, the company operated 248 stores in 20 countries.
In April, American Apparel closed a private bond offering of $206 million and entered into a new $35 million, five-year revolving credit facility with Capital One Bank. The new financing allowed American Apparel to repay and terminate its prior high-interest credit facilities with Lion Capital LLC and Crystal Financial LLC.
“Despite some liquidity challenges over the past two years, we have made the necessary investments that should allow us to exceed our prior EBITDA levels,” said Charney.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)