AMERICAN APPAREL, INC. REPORTS
FIRST QUARTER 2015 FINANCIAL RESULTS
LOS ANGELES, May 11, 2015 - American Apparel, Inc. (the "Company") (NYSE MKT: APP), a vertically-integrated manufacturer, distributor, and retailer of branded fashion basic apparel, announced financial results for its first quarter ended March 31, 2015.
Initial phase of strategic turnaround under way, and includes key initiatives in the areas of product development, e-commerce, retail store productivity, wholesale optimization, speed to market, cost cutting, brand building and infrastructure
Program to clear excess and slow-moving inventory implemented as part of management’s strategic shift to change the profile of inventory and actively reduce inventory levels to improve store merchandising, working capital and liquidity initiated in the first quarter
Strengthened the leadership team with hiring of the Chief Digital Officer, SVP Marketing, VP Demand Planning and Forecasting and SVP Chief Information Officer.
Reorganization and restructuring of critical business processes and platforms to drive performance improvements initiated in the first quarter
Loss per share in the first quarter 2015 was $0.15 and included $0.09 of significant charges
Adjusted EBITDA in the first quarter 2015 was $(7.9) million
Cash provided by operating activities in the first quarter 2015 was $3.1 million
Operating expenses in the first quarter 2015 decreased $8.6 million, or 11%, compared to the same period in 2014
Inventories in the first quarter 2015 decreased $25 million, or 17%, compared to the same period in 2014
Paula Schneider, Chief Executive Officer, commented, "American Apparel is an iconic brand with a loyal customer following and tremendous global brand awareness. The new executive management team and board of directors is committed to driving shareholder value and has implemented the initial phase of a multi-year strategic turnaround plan designed to improve operating and financial results over the long-term. Key areas of focus under the plan include infrastructure, operational and financial planning, expense control, design/product development, retail store productivity, e-commerce and wholesale optimization, e-commerce analytics, speed-to-market, and brand building. In the first quarter, we launched a program to improve the profile of our inventory by significantly reducing slow-moving merchandise. While we knew this would have a temporary negative impact on sales and margins, it should improve store merchandising, working capital and liquidity going forward. We also launched a merchandising turnaround plan to start replenishing stores with new styles and product. Also in the quarter, we began the arduous but vital task of reorganizing and restructuring a number of critical business processes, including product development, merchandise planning, operational and financial planning, inventory management, procurement, and demand planning. We are dedicated to this process and in the early stages of the strategic turnaround that will require time."
Operating Results - First Quarter 2015
Net sales for the first quarter of 2015 decreased 9% to 124.3 million from 137.1 million for the same period in 2014. Excluding the year over year impact from foreign exchange and stores closed in 2014 net sales decreased 4% for the same period in 2014. First quarter comparable store sales were negative 5% for both the first quarter of 2015 and 2014. Negatively impacting comparable store sales in the first quarter of 2015 was a strategic initiative to reduce inventory levels by accelerating the sale of slow-moving merchandise in the retail stores. This initiative shifted the merchandise mix in the retail and online stores towards clearance-related product.
Gross profit for the first quarter of 2015 decreased 34% to $47.5 million from $72 million for the same period in 2014. The decrease was related to discounts related to management’s strategic initiative to reduce inventory levels by accelerating the sale of slow-moving inventory, the foreign exchange impact of the strengthening US dollar and lower retail sales. Gross profit, excluding significant charges, decreased to 42.0% of net sales in the first quarter of 2015 from 52.5% in the first quarter of 2014.
Operating expense for the first quarter of 2015 decreased 11% from $79.0 million, compared to $70.3 million for the same period in 2014 due primarily to lower payroll from our cost reduction efforts and reduced rent, supplies and miscellaneous activities.
The following information was filed by American Apparel, Inc on Monday, May 11, 2015 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.