• Q2 loss of US$14.7m, versus profit of $4.5m
  • Sales down 2.5% to $132.7m
  • Uncertainty remains over future of company
American Apparel faces more worries after sliding to a Q2 loss

American Apparel faces more worries after sliding to a Q2 loss

Doubts remain over the future of beleaguered retailer American Apparel after the company slid to another loss in the second quarter.

The delayed announcement of the US business’s results for the three months to 30 June offered little respite for the company, which has been fighting mounting debts in recent months.

American Apparel said losses were likely to continue “through at least the third quarter”, making it probable that it would breach its credit agreement with Lion Capital from 31 January next year.

That, in turn, would lead to a default under the company’s BofA credit agreement, although American Apparel said it anticipated working to amend the agreements with lenders before any breach could take place.

However, it admitted that a failure to do so would mean the company having to find alternative sources of funding.

“These factors, among others, raise substantial doubt that the company will be able to continue as a going concern,” said American Apparel.

Company management is currently executing a turnaround plan, including cutting production at its manufacturing facilities, streamlining logistics, renegotiating property leases including possible store closures and cutting retail staff.