Shares of American Apparel Inc. spiked nearly 30 percent in after-hours trading Wednesday after the company reported a 20 percent increase in March same-store sales.
The Los Angeles-based vertical casual apparel retailer also reaffirmed its guidance for full-year adjusted earnings before interest, taxes, depreciation and amortization of between $32 million and $40 million for fiscal 2012. “As such, we believe we will be in a position to refinance elements of our higher cost capital structure and significantly reduce our interest expense by late 2012 or early 2013,” said Dov Charney, chairman and chief executive officer of the debt-encumbered company.
Total sales in March were $49 million, 15 percent above the year-ago month, with comparable-store sales up 20 percent and online sales up 22 percent. Wholesale sales rose 10 percent. The March performance elevated net sales for the quarter ended March 31 to $132.7 million, 14 percent above the 2011 period, with comps for the three months up 14 percent, online sales up 24 percent and wholesale revenues up 17 percent.
The strong monthly and quarterly showings excited investors, who pushed up shares of the company’s stock 28.9 percent in after-hours trading following the disclosure. Shares fell 1 cent to 77 cents during trading Wednesday and moved to 99 cents in the first hour after the close of the markets.
Even with its recent pickup in sales, American Apparel continues to labor under the weight of high-interest financing. Last month, it replaced a $75 million senior credit facility through Bank of America with $80 million in financing from Crystal Financial LLC, backed by George Soros, and Salus Capital Partners LLC, but at interest rates 4.5 points above the B of A line. At the same time, it extended the maturity of its burdensome facility with Lion Capital two years through 2015. It owes Lion about $116 million and is paying an interest rate of 18 percent on the principal.