After delaying second-quarter filings repeatedly for so long that the stock exchange threatened to delist the company, American Apparel finally turned in second-quarter results! And the numbers went probably the way everyone expected them to go: down. In this critical and practically storied filing, American Apparel also reiterated how fearful they are of completely tanking.
In the second quarter, ending June 30, losses totaled $14.7 million, while sales fell 2.4 percent. Last year in the same period, American Apparel reported an income (ah, memories!) of $4.5 million. For the first six months of the year, losses totaled $57.5 million as opposed to $6.1 million last year. Sales for the last six months, however, are up 1.7 percent.
Operating costs are killing the company, which appointed former Blockbuster CFO Tom Casey acting president last month. Their debt situation is such a mess that after multiple amendments to agreements with multiple creditors to allow them more time to pay back loans or borrow more money from other people to pay back loans, American Apparel still might not be able to meet obligations to all the people they've borrowed from. With no angels having emerged to rescue it yet, the company is under a very real threat of going out of business:
Based on results and projections for the rest of 2010, American Apparel said it “may not have sufficient liquidity necessary to sustain operations for the next 12 months. The company’s current operating plan indicates that losses from operations are expected to continue through at least the third quarter of 2010.”
The company is trying to pull its act together and come up with a plan to keep operating costs from driving it into the ground. This might mean closing stores, the international breadth of which numbers close to 300 in the U.S. and nineteen other countries.
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