AMERICAN APPAREL, INC. REPORTS
SECOND QUARTER 2015 FINANCIAL RESULTS
LOS ANGELES, August 17, 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 second quarter ended June 30, 2015.
Announced the next phase of its strategic turnaround plan including approximately $30 million in cost-cutting initiatives over the next 18 months.
Strengthened the leadership team with hiring of General Manager of Global Retail and President of Wholesale to help execute its global retail and wholesale turnaround strategies.
Loss per share in the second quarter 2015 was $0.11 and included $0.05 of significant charges
Adjusted EBITDA in the second quarter 2015 was $4.1 million
Operating expenses in the second quarter 2015 decreased $8.2 million, or 10.2%, compared to the same period in 2014
Inventories in the second quarter 2015 decreased $32.6 million, or 22.1%, compared to December 31, 2014.
Operating Results - Second Quarter 2015
Net sales for the second quarter of 2015 decreased 17.2% to $134.4 million from $162.4 million for the same period in 2014. Excluding the year over year impact from foreign exchange and stores closed in 2014, net sales decreased 14% from the same period in 2014. The decline in comparable sales was attributable to the lack of new style introduction for the spring and summer selling season. Net sales also decreased approximately $3 million due to the store closures. In addition, the unfavorable impact of foreign currency exchange rate changes contributed to the sales decrease of approximately 4% or $6.2 million.
Gross profit for the second quarter of 2015 decreased 25.3% to $61.5 million from $82.4 million for the same period in 2014. Gross margin for the second quarter of 2015 was 45.8% compared to 50.7% for the same period in 2014. The decrease was primarily related to lower retail sales coupled with the negative effects of foreign currency exchange rate changes and an increase in workers compensation and health benefit costs.
Operating expense for the second quarter of 2015 decreased 10.2% to $71.4 million from $79.6 million for the same period in 2014 due primarily to lower payroll and reduced shipping, rent, supplies and miscellaneous activities, all primarily as a result of our cost reduction efforts. Excluding the effects of the significant charges described below, operating expenses decreased 12.8% to $65.1 million from the same period in 2014.
Net loss for the second quarter of 2015 was $19.4 million or $0.11 per share, compared to net loss of $16.2 million, or $0.09 per share for the second quarter of 2014. Results for the second quarter of 2015 include $8.3 million, or $0.05 per share, related to significant charges.
Liquidity and Capital Resources
Under the $10 million "at-the-market" offering program, we may, from time to time and at our discretion, offer and sell shares of our common stock having an aggregate gross sales price of up to $10 million (but in no event more than 15 million shares). We have used the net proceeds generated through the program for working capital and general corporate purposes. As of June 30, 2015, we had issued 4 million shares of our common stock for net proceeds of $2.0 million. Sales of common stock under the "at-the-market" offering program are at our sole discretion and subject to the terms and conditions of the sales agreement related thereto, and there are no assurances that such sales will continue in the future.
As of June 30, 2015, we had $6.9 million in cash, $38.4 million outstanding on our $50.0 million asset-backed revolving credit facility with Capital One and $6.1 million of availability for additional borrowings as of such date. On August 11, 2015, we had $11.2 million in cash. As of June 30, 2015, we had $210.6 million aggregate principal amount of senior secured notes (the "Notes") outstanding. On April 14, 2015, we paid $13.8 million in interest on the Notes. The next scheduled interest payment on the Notes due on October 15, 2015 is approximately $13.9 million.
As of June 30, 2015, we were not in compliance with the minimum fixed charge coverage ratio and the minimum adjusted EBITDA covenants under the Capital One Credit Facility. For the April 1, 2015 through June 30, 2015 covenant reference period, our fixed charge coverage ratio (as defined in the Capital One Credit Facility) was 0.07 to 1.00 as compared with the covenant
The following information was filed by American Apparel, Inc (APP) on Monday, August 17, 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.