Scandal-hit American Apparel posts bigger-than-expected losses

American Apparel has reported bigger than expected losses for its second quarter, as the company attempts to ride out a series of scandals relating to founder and former chief executive Dov Charney. 

 

The retailer said in a preliminary filing that it expected to make a net loss of $15m (£8.9m) for the three months to June 30, or nine cents a share, below analyst expectations of six cents a share. Sales are estimated to be flat at $162m (£96m), which was also below analyst consensus. 

 

Half-year figures are expected to show a 0.3% decline in sales to $299m (£178m), with net losses estimated at $21m (£12.5m) compared with $84m (£50.2m) last year. As a result stockholders’ deficit is estimated at $67m (£40m) as at June 30, compared with $77m (£46.1m) at December 31, 2013. 

 

The news comes two months after Charney was ousted for alleged misuse of corporate funds and his role in disseminating nude photos of an ex-employee. 

 

The preliminaries were published in a report explaining that it was delaying posting its full results after the board went through recent upheaval that saw five of its seven directors resign in one day (July 9), with replacements only being made earlier this month (August 2 and 8). 

 

“The new board needs additional time to review the financials and ask questions of management before the company is in a position to finalise the financials,” the statement said.