American Apparel hangs on by a thread
Shares tumble after the clothing retailer reveals it might not make it through the year.
By Jeanine Poggi, TheStreet
American Apparel's (APP) stock is taking a bloodbath after the clothier warned that its dwindling liquidity may not be enough to sustain it through the year.
The company said Tuesday that it may be unable to repay a loan due in September and that it is in talks with creditors. As of the end of the second quarter, its debt rose 32% to $120.3 million.
American Apparel said it would delay its second-quarter earnings report after its accounting firm, Deloitte & Touche, resigned last month. The company found a new auditor, Marcum, but said Tuesday that it has received a federal subpoena related to the switch.
Shares were plunging 22.3% Tuesday to $1.08 shortly before the market close and have fallen more than 60% in the past three months.
American Apparel predicts a second-quarter loss of between $5 million and $7 million on sales of $132 million to $134 million. In the second quarter of last year, the company reported a profit of $7.3 million on revenue of $136.1 million. Post continues after video:
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Willing.Sniper, I too know about this ICE raid. I believe they actually lost many more people, about a third of their workforce. Businesses that can not control their hiring practices need to go and suffer hefty fines in the process. This company like Swift, SK Foods to name a few are not hiring a diversified workforce. They are mostly Hispanics and many don't speak English. To me that is the first sign of illegal. We know about Swift & SK Foods is due for a massive raid. I believe Starbucks is one of their accounts for sandwiches. We need to start asking tough questions and voting with our dollars. Do not buy from companies that ignore or aren't diligent with hiring laws or their suppliers. Fire and do not hire people not legally authorized to work in the US. It is a safety issue to not speak English in a workplace if the company is compliant with Federal laws and diversity. Most Americans speak English. Not hiring unauthorized people is one thing that will cause many to self deport. No job for you. Good Bye!
Since our economy fell I've been looking for American made products. When I visited my local department store I was looking for anything Made in USA in the men's department. I was surprised that there was nothing. It seems that all the major department stores are the same. Made in Pakistan, Mexico, China, Indonesia... the list goes on. I think this is a major part of our economic problem. We have allowed the big names like Levis, Wrangler, Lee and on and on, send their factories overseas. I switched from Levi jeans to Lucky Brand ($100/pair) because they were made in the USA but check the label now. Made in Mexico. The third world countries like Thailand impose import taxes on products made outside their country and at rates as high as 100%. If the USA would do the same, there would be no incentive to send the work out of our country. I'm sure the prices would go up but if more people had jobs here I'd be happy to pay extra. I already wrote Mr. President and my congressman about this but neither commented, imagine that. This is our country and we are the only ones that can do something about it.
I agree with pretty much everything that is said...
1)the owner has been accused a number of times of sexual harasssment
2)the ads are not good
3)they are not ethical in their hiring practices.
The only thing I don't agree with is that their material is crap. The polyblend track shirt they have is awesome. I got one at a trade show and can't stop wearing it. It also has an imprint on it and it never fades. I know a number of places that choose this shirt to print on. It is a nice change from the thicker cotton shirts. I think someone will buy the company out of bankruptcy and hopefully manage it in a more ethical manner...and hopefully turn it around.
Grandpa 51, they did not CHANGE accounting firms. Their accountants RESIGNED...that means they were no longer able to audit the firm most likely because they felt ethically compromised. Remember Arthur Anderson...if they had done the same thing, they might still be around. So there is a MAJOR difference between changing accounting firms and and having your accountant withdraw from the engagement.
What a travesty one of the few or only high quality manufacturer of T-Shirts and related apparel wear made in the U.S.A. not in sweat shops in Bangledesh, China, Indonesia etc. is going through this crap. Where are the american people? the true americans who value top quality and good workmanship and would gladly pay a little extra for a top notch product. I'm afraid that a good percentage have been dummied down by the likes of retailers such as Wal-Mart, K-Mart and most other so called american multi-national companies who's only motive is profit and taking jobs away from talented american workers for one reason and one reason only greed and big profit for CEO's and shareholders.
I'm afraid that americans will wake up too late and the destruction of our fine country will continue until we are reduced to serfs working for sub standard wages. The once admired standard of living we had in the U.S.A. has been on a steady decline and it will continue to do so unless the american consumer wakes up and demand that the government reverses its outdated import/export policies and creates good paying union jobs. We need to revise the Eisenhower era induced with Roosevelt's WPA and public work projects.
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