Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

American Apparel Raises ‘Going Concern’ Doubts as Losses Mount

American Apparel Inc. said it may not be able to sustain operations as a going concern for the next 12 months, even after the clothing chain increased its credit line.
American Apparel | Source: Reuters
By
  • Bloomberg

LOS ANGELES, United States — American Apparel Inc. said it may not be able to sustain operations as a going concern for the next 12 months, even after the clothing chain increased its credit line.

A group of lenders, including hedge fund Standard General, replaced its $50 million credit facility with a larger $90 million one, the Los Angeles-based retailer said on Monday. The company said last week that Standard General intended to take this step.

The clothing maker has been in turmoil since it suspended and then fired founder and Chief Executive Officer Dov Charney for alleged misconduct. Charney, who was replaced as CEO by Paula Schneider, has sued over his ouster and said the allegations against him are baseless.

The retailer also on Monday confirmed second-quarter results that it reported on a preliminary basis last week. Sales sank 17 percent to $134.4 million, and the net loss expanded to $19.4 million from $16.2 million.

ADVERTISEMENT

As of Aug. 11, the chain had $11.2 million in cash. It has a bond-interest payment of about $13.9 million due on Oct. 15.

As a result of its dwindling cash, the company said in a filing that it may have to raise more capital, restructure its debt or seek bankruptcy protection from creditors.

The company declined to comment beyond the filing.

The shares were little changed at 15 cents in late trading in New York after falling 85 percent this year through Monday’s close.

By Matt Townsend; editors: Nick Turner, Kevin Orland, Reed Stevenson.

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Retail
Analysis and advice from the front lines of the retail transformation.

How Rent the Runway Came Back From the Brink

The rental platform saw its stock soar last week after predicting it would hit a key profitability metric this year. A new marketing push and more robust inventory are the key to unlocking elusive growth, CEO Jenn Hyman tells BoF.


Why Esprit’s Ambitious Rebrand Fell Short

The company is in talks with potential investors after filing for insolvency in Europe and closing its US stores. Insiders say efforts to restore the brand to its 1980s heyday clashed with its owners’ desire to quickly juice sales in order to attract a buyer.


How Adidas Sambas Took Over the World

The humble trainer, once the reserve of football fans, Britpop kids and the odd skateboarder, has become as ubiquitous as battered Converse All Stars in the 00s indie sleaze years.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
The Business of Beauty Global Awards - Deadline 30 April 2024
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
The Business of Beauty Global Awards - Deadline 30 April 2024