American Apparel seeing financial improvement, early report shows
American Apparel Inc., the Los Angeles retailer that recently ousted its controversial chief executive, said it won’t meet the deadline to file its second-quarter financial results.
The company said Tuesday that its new board of directors needs more time to review financial statements and ask questions of management. It did, however, release preliminary results that showed improvement from the previous year.
Net sales remained essentially flat at $162 million, while its loss narrowed, the company said in a regulatory filing. American Apparel estimated its second-quarter loss at $15 million, or 9 cents a share, compared with $38 million, or 34 cents a share, in the same quarter last year.
The company shook up its board last month, adding four new members after reaching a deal with investment firm Standard General, which extended a $25-million financial lifeline. The New York firm controls a nearly 44% stake in American Apparel through a cooperative buying arrangement with ousted CEO and company founder Dov Charney.
American Apparel’s board booted Charney as CEO and chairman in June after years of misconduct allegations, including sexual harassment lawsuits.
As part of its $25-million lifeline, Standard General purchased a $10-million loan that a lender demanded the retailer pay back.
Charney remains suspended from his CEO position while company-hired investigators look into allegations, including one that he allowed the release of racy photos of a woman who was suing him.
Charney, who says he was wrongfully ousted and that his personal life has no bearing on his professional capabilities, is currently a paid consultant with no authority over employees.
A special board committee will decide his fate once the investigation is complete.
As part of the deal with Standard General, Charney and four other board members resigned, while two remained.
On Tuesday, American Apparel said a person was appointed to the final slot last week, but did not disclose the director’s name.
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Staff writer Shan Li contributed to this report.
