Aug 13, 2010
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American Apparel faces failure?

Aug 13, 2010

U.S. financial results revealed American Apparel’s Q1 losses. With 91.4 million dollars of debt and 6% drop in 2009 sales, the brand began 2010 with a further 10% fall.

American Apparel

The first quarter was consumed by a drop in sales to $17.6 million on a comparable basis and the label’s share price collapsed just recently as it delayed publishing its second quarter figures.

Over the last year, more than 67% of its value has disappeared. Even if the regular opening of shops was bringing in sales turnover throughout the last few seasons, it was done during the economic crisis so these shops are also saddling the company’s precarious financial situation.

Demanded to pay $5 million to Woody Allen for using his image without permission, forced to lay off 1,500 illegal workers, accused of job discrimination; the brand is accumulating resentment. To head its network of 280 stores, American Apparel has been trying, for several months to find the support from the investment fund group, Lion Capital to spread its debt.

It will not be for another few days until we see what this brand’s finances really look like but American press is already claiming bankruptcy looms.

Original by Matthieu Guinebault. Translated by Rosie Hart

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