American Apparel Inc. has promoted Adrian Kowalewski to executive vice president and chief financial officer.
This story first appeared in the December 30, 2008 issue of WWD. Subscribe Today.
As cfo, he succeeds Ken Cieply, who left the company in May. Cieply resigned after American Apparel’s controversial founder and chief executive officer, Dov Charney, said in a March Wall Street Journal interview that his cfo was a “complete loser” with “no credibility” in the retail apparel industry.
Charney later retracted the comment, but Cieply left to pursue other opportunities. William T. Gochnauer was appointed interim cfo shortly after.
Kowalewski, 31, will continue to serve as director of corporate finance and development, a job he has held since 2006. He also will continue to serve as a director of the firm, as he has since the completion of its merger with Endeavor Acquisition Corp. in December 2007.
Prior to joining the Los Angeles-based retailer, Kowalewski worked in mergers and acquisitions at investment banks CIBC World Markets, Houlihan Lokey Howard & Zukin and Lazard Freres & Co.
“In light of his past contributions to American Apparel, and his efforts over the past six months in helping to build the accounting and finance functions at the company, both I and the rest of the board have full confidence that he will serve the company well in this new leadership role,” Charney said of Kowalewski.
Shares of the maker of slim-fit T-shirts and other basics fell 27 cents, or 14.8 percent, on Monday to close at $1.55, a new 52-week low. The corresponding high is $15.28.
The stock has been under increasing pressure in recent months not only because of the difficulties confronting a wide range of apparel retailers, but also because of a series of legal skirmishes, tougher refinancing terms for its credit facility and unimpressive third-quarter earnings.
Last week, American Apparel became locked in a legal skirmish when the retailer was sued by its former head of European operations for wrongful termination, breach of oral contract and infliction of emotional distress, among other allegations. American Apparel has filed a suit of its own against the former executive. The cases are the latest in a string of lawsuits against the retailer on grounds ranging from wrongful termination to sexual harassment and employment discrimination.
On the financial end, the company said on Dec. 22 that it was given a three-month extension on debt due to mature next month, which, according to some analysts, carries more risk in a tough economy.
“Though we believe American Apparel operates a resilient and geographically diversified model, heightened sensitivity to the weakening global macroeconomic conditions can’t be ignored,” said Lazard Capital Markets analyst Todd Slater, who lowered his estimates and price target for the firm.
For the third quarter ended Sept. 30, net income slid to $2.3 million, or 3 cents a diluted share, due to stock-based compensation related to its merger with Endeavor. Excluding merger-related costs, the company said it would have reported earnings per share of 16 cents, beating analysts expectations of 13 cents on sales of $149.3 million.
However, the retailer’s revenue growth has been sustained. In the most recent quarter, sales were up 45.2 percent to $154.8 million, as same-store sales rose 24 percent for the period.