Los Angeles–American Apparel continued to struggle as it posted a $19.2 million loss, or 11 cents a share, in the third quarter and its stock fell to under 70 cents in trading today (November 11).
The loss was more than 10 times the $1.5 million dollar deficit in the same quarter last year, and reflects the company’s fortunes as fighting continues between deposed CEO Dov Charney and the board of directors. It was also far worse than the 3 cents a share loss that analysts expected.
The board continues to investigate the charges of misconduct by Charney as rumors swirl that they may reach a deal that allows him to remain part of the company. The Los Angeles company, which ousted Dov Charney as chief executive in June, said it lost $19.2 million, or 11 cents a share, in the three months ended Sept. 30. Analysts had forecast a loss of 4 cents a share.
In comparison, the retailer reported a net loss of $1.5 million, or 1 cent, in the same period a year earlier.
Revenue fell 5.3% to $155.9 million, down from $164.5 million a year earlier. U.S. sales at both the retail and wholesale segments dropped, and international sales also slid.
The numbers may be a bit deceiving, however. The current CEO, Scott Brubaker pointed out that the adjusted earnings, after removing the costs of interest, taxes, depreciation and amortization rose to $13.5 million from $9.8 million, thanks to reduced spending. Additionally, the company spent $5.3 million last quarter on the costs and legal fees relating to Charney’s suspension. In a statement, Brubaker said he was “encouraged by these results, and am optimistic about the future prospects of the business.”
Charney founded American Apparel in 1998 and had been an advocate and poster boy for continuing to manufacture in the United States despite the overall trend to move overseas and lower costs.