American Apparel cannot catch a break. First, the retailer's extremist employee dress code stipulations were called into question thanks to Gawker getting its hands on internal memos. Then, of course, there was the immigration raid that led to American Apparel's LA factories losing roughly 20% of their workforce. With sales down and finances in the shitter, various outlets have been awaiting an announcement of bankruptcy from the clothing engine that, at one time, seemed to always be on the up and up. With the company now reporting that its first-half of the year losses have been "substantial," according to Women's Wear Daily (the first quarter alone saw drops in profits from $5-$7 million), and, subsequently, perhaps on the precipice of having major trouble getting financing, things are looking grim. "Based on this, and trends occurring in the company’s business after the second quarter and projected for the remainder of 2010, the company may not have sufficient liquidity necessary to sustain operations for the next twelve months," American Apparel told WWD. Meaning, this may very well be the end.
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Operations over at Abercrombie & Fitch HQ aren’t looking to sunny either. Bed bug invasions aside, the chain retailer has been suffering similarly staggering losses in the past year. Profits may be up but extreme discounts are to blame for a drop in earnings. “Shares of Abercrombie & Fitch Co. sank just over 9 percent to $34.24 in mid-morning trading Tuesday, after the teen retailer said it would shutter 60 domestic stores in the year,” adds WWD. While the company is by no means in the same position as American Apparel, with cutbacks like these A&F will have to look to a lot more than a risque quarterly to get back on its feet.
Courtesy of BlackBook.
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