American Apparel Q2 Loss Narrows on Steadier Sales

American Apparel clothing and accessories on ASOS, a European website

Los Angeles–American Apparel reported Monday that it narrowed its second quarter as loss its sales have been “steadily improving” during the summer.

For the quarter ended June 30, the vertically-integrated apparel and accessories specialty chain posted a loss of $213,000 compared with $14.6 million loss in second quarter 2010.

Total sales were $132 million, flat with the year ago quarter. Comparable store sales were also flat, but the retailer said its comparable store sales rose 3% in June and 4 in July, as consumers sought cool weather clothing during a record breaking hot month.

Gross margin increased to 54.5% up from 51.6% in the previous year, boosted by improved efficiencies at its Los Angeles factory, which executives said has recently finally recovered from the after-effects of a immigration raid last year that forced it to lay off more than 1,500 workers. Increased production, foreign currency gains from the low U.S. dollar and a shit to more online sales also has helped offset surging prices for cotton and yarn, the company said.

Partners with ASOS for Online Sales in Europe

Dov Charney, chairman, said the company to date had received $22.5 million in gross proceeds for the sale of shares and exercise of purchase rights in a Canadian equity investment announced in April. “This additional capital will allow us to take advantage of improving business conditions in order to build upon our recent successes,” Charney said. “Together with our improved operating performance, this new capital makes us well positioned to strengthen our balance sheet.”

American Apparel, which recently announced collaboration with eBay to launch an online site, also announced it would be expanding its partnership with ASOS, a fashion website in Europe.

By expanding its distribution and sales channels, Apparel hopes to increase sales here and abroad. Besides its base in the United Kingdom, ASOS also sells in Denmark, Russia, New Zealand, Singapore and Hong Kong, countries where American Apparel does not currently have stores.

“American Apparel began as a wholesaler and built its reputation as a brand through high-end boutiques and trendy shops. Collaborating with an independent, forward-thinking site like ASOS is a return to our roots in a way. We’re continuing to explore these options and grow our business through them,” said Charney.

Merchandise categories currently offered through ASOS include men’s, women’s, swim and accessories, though footwear will be added in 2012. Inventory is purchased directly by ASOS through American Apparel’s wholesale business, and is then displayed and marketed through ASOS’s own online platform.

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