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American Apparel narrows loss

American Apparel reports a first-quarter loss of $7.9 million, down from red ink of $20.7 million a year earlier. Revenue climbs 14%.

May 11, 2012|By Shan Li, Los Angeles Times
  • A lawyer for American Apparel said the retailer would probably turn a profit “roughly in a two- or three-year time frame.” Above, an American Apparel store in Los Angeles.
A lawyer for American Apparel said the retailer would probably turn a profit… (Lawrence K. Ho, Los Angeles…)

Los Angeles clothier American Apparel Inc. reported a narrower financial loss and improved sales in its first quarter of 2012, but it continued to struggle.

For the quarter that ended March 31, the retailer reported a loss of $7.9 million, or 7 cents a share, an improvement from the loss of $20.7 million, or 28 cents a share, a year earlier. Sales totaled $132.7 million, a 14% jump from $116.1 million in the year-earlier period.

"We're beginning to see the results of greater efficiency in merchandise planning, systems for delivery to markets and inventory control," said Peter Schey, a lawyer for American Apparel. "We expect those trends to continue throughout the rest of the year."

Schey said the company would probably turn a profit "roughly in a two- or three-year time frame."

The company's online sales jumped 25% and its wholesale business rose 17%. Comparable-store sales, an important measure of sales because it compares stores open at least a year, saw a 14% increase.

American Apparel recently secured two lines of credit that provided the company more stability, and the retailer said in March that it was no longer concerned about its ability to stay in business. Schey said that improved worker productivity and better predictions about what shoppers want were boosting sales.

The company has "improved its ability to foresee styles, numbers and geographic and regional demands," Schey said. "We're also at the tail end of the long process of hiring and retraining workers to replace workers that the company was required to terminate" during an immigration audit in 2009.

American Apparel, which has struggled in recent years with slipping sales and allegations of sexual harassment against Chief Executive Dov Charney, is concentrating its efforts on expanding the brand and pushing up sales.

Shares of the company rose 3 cents to 93 cents.

shan.li@latimes.com

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