American Apparel has uncertain future

Los Angeles – American Apparel Inc., which warned shareholders of poor second quarter results last week, had more bad news this week. In addition to reporting growing net loss and shrinking net sales in a tough second quarter of fiscal 2015, American Apparel said it does not currently have enough cash to last the next 12 months and shareholders may lose some or all of their investment.



American Apparel had $11.2 million in cash as of Aug. 11, 2015. The retailer has an interest payment of $13.9 million scheduled for Oct. 15, 2015. In more bad news, American Apparel has fallen out of compliance with a Capital One credit facility, resulting in Capital One reassigning the facility to a syndicate of lenders including some existing American Apparel creditors. The retailer said it is examining solutions to its credit facility problem including refinancing, raising new equity, restructuring or other capital-raising transactions.



Net loss grew to $19.4 million, from $16.2 million the prior year period. Expenses shrank, but not at the same rate as sales, and the retailer also incurred expenses related to nearly 20 lawsuits brought on by founder and deposed CEO Dov Charney.Net sales decreased 17% to $134.4 million from $162.4 million, hampered by store closures, the lack of new spring and summer styles and foreign currency fluctuations.