American Apparel Inc. continues to garner new funding from the Canadian investment group that bailed the company out in April.
The trendy Los Angeles-based retailer received $1.6 million on Tuesday, according to sources, as the investment group, headed by Michael Serruya, exercised another batch of warrants that were part of the April purchase agreement that pumped a critical $14.2 million into American Apparel’s coffers and staved off a potential bankruptcy.
The share purchase comes following the exercise of $6 million in warrants on July 7 to purchase 6.7 million shares of American Apparel at 90 cents per share by the investment group, a below-market price that was part of the April investment agreement. The investment group is headed by the Toronto-based Serruya family, Delavaco Capital Inc., Dynamic Power Hedge Fund and Front Street Investment Management Inc.
Dov Charney, founder and chief executive officer of American Apparel, invested another $700,000 on the same date in exchange for additional shares.
About $17 million in warrants, also at 90 cents per share, remain for the Serruya group. They are likely to be exercised in batches before they expire in September, which will improve American Apparel’s capital position, said sources.
Shares of American Apparel closed at $1.08, up 1 cent, on Tuesday.
After shuttering 24 stores in the past year, the company is once again looking to expand its retail footprint as its financial picture improves. Charney has been traveling throughout Asia and North America over the past two months looking at potential sites for expansion.
A key effort will be opening leased corners in department stores, which require less capital expenditure than freestanding stores. The company is believed to be in advanced talks with Bloomingdale’s to open up to four leased corners in the U.S., with Bloomingdale’s ceo Michael Gould currently reviewing that proposal. Bloomingdale’s officials declined comment on the matter.
American Apparel just inked a deal with Australian department store Myer to open a corner in the Sydney flagship and is in advanced talks with Lane Crawford to open shops in its Asia stores.
Currently, there are leased American Apparel stores in the Galeries Lafayette flagship in Paris and the Selfridges flagship in London. Each are about 1,000 square feet and do $2 million in business per year, said sources.
American Apparel is also investigating opening airport locations and has tapped a consultant to help jump-start that business, with both retail shops and vending machines in the game plan.