How many sentences have we written lately that begin with the words “As if Dov Charney didn’t have enough to worry about already …”? Well, as if Dov Charney didn’t have enough to worry about already, it was reported this morning that the clothing company he founded, American Apparel, ended 2010 on a really bad financial note. How bad? Let’s just say in a year, it lost more money than we’ll ever actually see in our lifetimes.
The company’s Form 10-K, an annual report required by the Securities and Exchange Commission, detailed a $20 million dollar loss in the fourth quarter alone, which pushed American Apparel’s total loss for 2010 to $86.3 million. For perspective (if you’re the kind of person who needs perspective on how large $86.3 million is), with that money you could buy almost anything in the world because it’s $86.3 million.
American Apparel has been blighted with a lot of money-draining problems for the past few years now, including decreasing sales, falling stock prices and negative cash flow. Since last summer, there have been doubts about the business’s ability to survive, and with things looking even bleaker now than they did then, it’s a surprise Charney and company are still in business.
The company first noted doubts about its ability to continue as a going concern in August. In Thursday’s annual report, it cited not only results from operations and limitations with cash and credit, but also its 2010 sales results and “worldwide economic conditions and significant increases in yarn and fabric prices.”
But no decrease in yarn prices is going to make this problem go away — nor will it erase the multiple sexual assault charges that have been brought against Charney in the past few weeks. But it’d be wrong to say that the man’s business is dying because karma is rearing its head in his direction. It’s dying because he managed it really poorly. It’s a long road back from being $86.3 million in the red, and we seriously doubt Charney is equipped to make that journey.