American Apparel Is $120 Million In Debt
American Apparel anticipates it will report a substantial loss of income for 2010′s second quarter, one of many problems that may lead the company to lose “liquidity necessary to sustain operations for the next twelve months,” MarketWatch and WWD report.
From the end of March to the end of June, the company’s debt has increased by almost $30 million, to total $120.3 million. Declining retail sales, a shaky wholesale business and a handful of store closures are only a few of the financial issues that the company has faced in recent months.
Most noticeably, American Apparel failed to report its first and second quarter earnings results on time. The company has also gone through two accounting firms in the past year, switching back to Marcum after Deloitte and Touche discovered bad internal accounting practices and decided to stop providing its services.
Jenna Sauers at Jezebel reported yesterday that the New York Stock Exchange would delist the company if it did not file its earnings reports by 5:30 in August 16. The company has only today announced preliminary earnings results. Sauers noted that being delisted from a stock exchange is generally considered a prelude to bankruptcy.
Now, let us just say this: if there was ever a reason to believe in fate, karma or whatever you’d like to call it, now is the time. After years of wildly inappropriate advertising, hiring practices that make what Abercrombie puts its employees through look reasonable, and overpricing even the most basic of basics, all of Dov Charney‘s chickens are coming home to roost. While we’re sad to see a company dedicated to making its product in the USA go under, it would be wrong to blame our broader economic situation entirely. The company has more or less brought this upon itself, and we just can’t show any sympathy for that.
Related:
Uh-Oh: American Apparel Hanging On By A Fiscal Thread [Styleite]
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