American Apparel loses $26M in first quarter

While American Apparel implements a “strategic turnaround plan,” the severity of the company's financial problems is worsening.

Net loss at American Apparel Inc. grew to $26.4 million in the first quarter of fiscal 2015, from $5.5 million the same quarter a year earlier. Net sales dropped 9% to $124.26 million from $137.1 million. Same-store sales fell 5%.

“American Apparel is an iconic brand with a loyal customer following and tremendous global brand awareness,” said Paula Schneider, CEO. “The new executive management team and board of directors is committed to driving shareholder value.”

During the quarter, American Apparel implemented the initial phase of a multi-year strategic turnaround plan designed to improve operating and financial results over the long-term. Key areas of focus under the plan include infrastructure, operational and financial planning, expense control, design/product development, retail store productivity, e-commerce and wholesale optimization, e-commerce analytics, speed-to-market, and brand building.

The company said same-store sales were negatively impacted by a strategic initiative to reduce inventory levels by accelerating the sale of slow-moving merchandise. This initiative shifted the merchandise mix in the retail and online stores toward clearance-related product.“We are dedicated to this process and in the early stages of the strategic turnaround that will require time."

American Apparel Inc. is a manufacturer, distributor and retailer of branded fashion basic apparel based in downtown Los Angeles, Calif. As of March 31, the company had approximately 10,000 employees and operated 239 retail stores in 20 countries including the United States and Canada.