• FY sales up 3%
  • Comparable sales climb 3%
  • FY EBITDA to be in range of $7-9m
American Apparel faced challenges with its new distribution centre

American Apparel faced challenges with its new distribution centre

Basic clothing retailer American Apparel Inc has recorded an increase in full-year sales but expects 2013 adjusted EBITDA to plummet as costs related to its new distribution centre weigh on earnings.

Sales in the 12 month period climbed 3% to US$634m, while comparable store sales, including online sales, also rose 3%.

The company, however, said it expects adjusted EBITDA for the year to the end of December to be between $7m to $9m as compared to $36.6m last year.

"The challenged implementation of our new distribution centre had a material negative impact on the company in terms of actual costs (estimated at $14.9m)," said CEO Dov Charney.

"Naturally, the disrupted flow of merchandise to our stores, wholesale clients, and online customers had an immediate negative impact on sales."

The company said it expects 2014 sales and costs, however, to be enhanced by the operation of the La Mirada facility.

"Although this was a painful and costly endeavour it was necessary in order for us to achieve the future productivity and growth potential associated with the American Apparel brand," Charney said.

For fiscal 2014, American Apparel is projecting sales between $634m and $658m based upon a flat to 4% overall increase in net sales. Adjusted EBITDA is estimated in the range of $40m to $50m.