Things aren’t looking good for American Apparel.
The beleaguered Made-in-U.S.A. brand is set to emerge from bankruptcy proceedings this month, but while CEO Paula Schneider has insisted the turnaround strategy will drive revenue across the business, the latest numbers leave a lot to be desired.
American Apparel on Monday filed a quarterly report with the Securities and Exchange Commission that revealed revenue for the three months ended Sept. 30 fell from $155.87 million to $126.05 million, driven by big drops in the U.S. ($84.3 million from $100.25 million) and U.K. ($12.25 million from $17.4 million).
Meanwhile, gross profit for the period was $53.66 million, down from $82.54 million, and losses widened from $18.54 million or $0.11 per share to $25.56 million or $0.14 per share.
Comparable store sales for the quarter were down 14 percent across the Los Angeles-based brand’s 227 stores, versus a decline of 7 percent across 245 stores for the three months ended Sept. 30, 2014.
Last week, a bankruptcy court in Delaware approved American Apparel’s prearranged plan of reorganization, which will swap $230 million in debt for equity with bondholders, including Monarch Alternative Capital and Standard General, and officially cutting all ties with founder and ousted CEO Dov Charney.
But the disgraced Charney could still make a comeback.
According to Bloomberg, Hagan Capital Group—one of the investment firms that made a $300 million takeover bid for American Apparel two weeks ago which included bringing Charney back on board—are backing him on a new venture.
Chad Hagan, managing partner at Hagan Capital Group, this week revealed Charney’s plan to create a clothing line for men and women comprising American-made basics. Sound familiar?
Following last week’s bankruptcy ruling, Charney issued a farewell letter of sorts that stated, “The sad reality is that American Apparel, the largest garment manufacturer in the United States, will not survive at this pace and I don’t believe the current management has the talent to bring it back to health.”
He added, “At the end of this saga, I, like the many former stockholders, will most likely be left with nothing. Despite that, what gives me great optimism are the things I possess that can’t be stolen by a predatory hedge fund—my ideas, values, drive, authenticity, integrity and my passion. To that end I ask that my supporters stay tuned.”