US: American Apparel Q3 loss widens despite sales gains
- Q3 net loss widened to $19.0m from $7.2m
- Net sales increased 15% to $162.2m
- Comparable store sales up 20%
American Apparel Inc has lowered its full-year earnings outlook blaming business lost as a result of Hurricane Sandy, but insists its recovery plan is still on track.
The company says it now expects EBITDA (earnings before interest, taxes, depreciation, and amortization) to be in the range of $36m to $40m, with the upper end down from $44m forecast earlier.
The change in forecast followed a third quarter in which net losses almost tripled to US$19m on charges linked to the value of outstanding warrants.
But chairman and CEO Dov Charney nevertheless hailed "solid growth and continuing momentum in all business segments and major geographies.
"Significant sales growth allowed us to more than double our EBITDA performance to $13m for the third quarter of 2012 from $6m for the third quarter of 2011."
The US company has enforced tighter inventory management systems, and achieved a 5% reduction in unit inventory in the three months to 30 September. The knock-on effect was to reduce gross margin rate to 52.5% from 53.2%.
As well as cutting operating expenses, the firm has also benefited from lower inventory shrinkage thanks to an RFID programme, and lower costs of production in its manufacturing operations.
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