Published On: Tue, Aug 19th, 2014

Despite the Curves, Flat Q2/14 Sales at American Apparel

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American Apparel is still a troubled company, forced to deal with slower sales and expenses that rose over ongoing problems connected to the ouster of founder Dov Charney.

Sales came in for Q2/14 at$162 million, which were flat, and although losses were less than the same period last year, $16.2 million compared to $37.5 million in 2013, they were still significant.

Back in July, while American Apparel founder and former CEO Dov Charney was still under investigation for sexual misconduct, the company hired him as a “strategic consultant.” This may lead to better results in the third quarter.

The current environment is tough for retailers, and in the case of American Apparel, it is made more difficult with the $2 million in expenses the company has taken over investigations into Charney’s professional and personal conduct. He insists that he be allowed back on the board, even waiving voting rights without the consent of Standard General, which has significant representation on the board.

Dov Charney was forced out on June 18 by a board he had handpicked. The decision to allow him back on the board depends on the result from the ongoing investigations. In addition to these problems, sales of American Apparel dropped 6%, with online sales declining 3%, and the company was not successful in its introduction of a new distribution center. While the wholesale business was robust with a 9% uptick in sales, the company has to deal with a $1 million settlement concerning an industrial accident when a worker was crushed by a knitting machine in 2011.

However, amid all of these problems, the stock is trading up to above $1, which is a significant rise to the 50 cent price per share level it saw earlier this year.

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