New Distribution Center to Weigh on American Apparel’s Results

americanapparelLos Angeles—American Apparel Inc. has recorded an increase in full-year sales but  said Thursday afternoon it expects 2013 adjusted earnings to plummet as costs related to its new distribution center weigh on results.

Sales in the 12-month period rose 3% to $634 million, while comparable store sales, including online sales, also rose 3%.Wholesale net sales increased 4% to $180.7 million.

2014 Forecast: Improved

The company, however, said it expects net profit for the year to the end of December to be between $7 million to $9 million as compared to $36.6 million last year.

“The challenged implementation of our new distribution center had a material negative impact on the company in terms of actual costs (estimated at $14.9 million),” said CEO Dov Charney. “Naturally, the disrupted flow of merchandise to our stores, wholesale clients, and online customers had an immediate negative impact on sales.”

The company said it expects 2014 sales and costs, however, to be enhanced by the operation of the La Mirada facility.

“Although this was a painful and costly endeavor it was necessary in order for us to achieve the future productivity and growth potential associated with the American Apparel brand,” Charney said.

For fiscal 2014, American Apparel is projecting sales between $634 million and $658 million based upon a flat to 4% overall increase in net sales. Adjusted EBITDA is estimated in the range of $40 million to $50 million.




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