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American Apparel raises its forecast despite widening loss in Q2

US fashion retailer American Apparel saw its second quarter losses widen despite an increase in sales.

GENERAL MERCHANDISE

American Apparel raises its forecast despite widening loss in Q2

US fashion retailer American Apparel saw its second quarter losses widen despite an increase in sales.

The company has reported a net loss of $15.3 million, or 14 cents a share, in the quarter ended 30 June. This compares to a loss of $213,000, or flat earnings per share, in the same period a year earlier.

Revenue reached $149.5 million, up 13% from $132.8 million a year ago.
Same store sales in the quarter increased by 14% while gross margin narrowed to 52.9% from 54.5% due to planned promotional activities and the effect of "warehouse-type" clearance sale.

The latest quarter included a $1.4 million unrealized loss on the change in fair value of warrants and purchase rights, compared with a $13 million gain in the same period last year.

Dov Charney, chairman and CEO of American Apparel, Inc. said: "We are pleased with our second quarter results that again show solid growth and continuing momentum in all business segments and major geographies. Though the first two quarters are historically our slowest, significant sales growth allowed us to more than double our EBITDA performance to $7.6 million in the second quarter of 2012 from $3.7 million in the second quarter of 2011.

"In the second quarter we saw over 30% of our stores with sales growth in excess of 20% and as we continue to scale our operations and further implement store-level improvements, we believe we can raise the overall sales performance even further."

The retailer said it had employed a number of tactics to improve sales and profitability. These included tighter inventory management systems, continued store renovations, the building of  a new distribution centre  infrastructure, and the installation of traffic counters to improve customer conversions.

American Apparel is raising its adjusted EBITDA guidance for 2012 to between $36 to $44 million from the prior estimate of $32 to $40 million. It is also anticipating revenue of $604 million to $611 million, which is an increase on its previous estimate of  $570 million to $590 million.

The company operates around 251 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France.

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