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Analyst: American Apparel Is ‘On the Cusp of Total Collapse’

American Apparel's numerous scandals relating to its advertisements and fishy-seeming employee dress code and retention policies haven't necessarily hurt the company in the past. And that's hardly its biggest concern now — as it fails to meet obligations to creditors, its stock has tumbled to the single digits, and it faces the possibility of being delisted from the stock exchange. MSNBC reports:


“American Apparel is unique because they’re on the cusp of a total collapse,” said Howard Davidowitz, chairman of the retail consulting and investment banking firm Davidowitz & Associates. “You don’t have many people out there breaching their loan covenants. They are not a going-forward company until they can resolve the financial issues.”

However CEO Dov Charney is going about business as though unconcerned with his financial mess.


“Our company in the past has been through these types of issues before and it’s never really presented us with any particular difficulties in running our business,” he said in a conference call with analysts last month after the company reported a $17.6 million quarterly operating loss on sales of $121.8 million.

The company hasn't come up with a plan to fulfill its obligations as a debtor, but why rush when serious financial pickles haven't hindered them in the past? As another analyst puts it: "They’ve got a very differentiated brand and it still resonates with customers." And Davidowitz may think the company is on the "cusp of a total collapse," but he seems to think they'll be able to avoid hitting rock bottom. "I think it’s amazing that they’ve been able to come to this point and, like, have this degree of success," he says. Agreed. Who actually buys the tiny ass-cheek–exposing shiny underwear-shorts, anyway?

American Apparel faces fresh crisis [MSNBC]

Photo: www.americanapparel.com

Copyright © 2013, New York Media LLC. All Rights Reserved. The Cut® are registered trademarks of New York Media LLC.

Copyright © 2013, New York Media LLC.
All Rights Reserved.

Copyright © 2013, New York Media LLC. All Rights Reserved.

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