Los Angeles–American Apparel Inc. said Tuesday said it won’t meet the filing deadline for second quarter financial statements because its new board needs more time to review results, but it provided preliminary figures.
For instance, American Apparel still reported a loss although it was narrowed from a year ago. Second quarter net loss is about $15 million, or 9 cents a share, compared with a loss of $37.5 million, or 34 cents a share, a year earlier.
Charney’s Fate to be Decided
Net sales were basically flat at $162 million versus $162.2 million a year earlier while gross margin is estimated to have narrowed slightly to 51% from 52% in the year ago quarter.
Analysts’ average forecast expected a loss of 6 cents a share on sales of $162.5 million.
In April, American Apparel stopped reporting monthly sales figures. Although cold weather hurt sales in March, the company said in May that first quarter results were ahead of its business plan. First quarter sales fell 1% to $137.1 million, while the company posted a narrower net loss and lower operating expenses.
American Apparel has been embroiled in controversy after founder/CEO Dov Charney was suspended in June amid allegations of misconduct. The company then created a new board last month.
Charney, who claims he was wrongfully ousted and that his personal life has no bearing on his professional capabilities, is currently a paid consultant with no authority over employees. A special board committee will decide his fate once the investigation is complete.
Four new directors were named to join David Danziger and Allan Mayer, two members of the old board who kept their roles as co-chairmen. Two of the new directors were appointed by hedge fund Standard General, which provided $25 million in financing to American Apparel. Some of the funding was used to pay a loan that was called in by investment firm Lion Capital.
At June 30, the company had about $10 million in cash. As of Aug. 1, it had about $23 million available for additional borrowing under its Capital-One credit facility.