American Apparel Posts Preliminary $15 Million Net Loss

Aug 13, 2014 9:40 am ET

(Updates share price in sixth paragraph.)

Aug. 13 (Bloomberg) -- American Apparel Inc., the clothing retailer whose founder is fighting to regain control of the company, posted a preliminary second-quarter net loss of $15 million as it failed to boost sales.

The loss, which the Los Angeles-based company disclosed yesterday in a filing, is narrower than its $38 million loss a year earlier. Sales were little changed at about $162 million, according to the company, which said it’s delaying its official quarterly report because of the recent overhaul of its board.

The results show that American Apparel still is struggling to revive its business at the same time that founder Dov Charney and the board are battling over who will run the retailer. The company has now lost about $290 million in the past 4 1/2 years as sales weakened while a malfunctioning distribution center raised costs and slowed its ability to react to consumer trends.

Charney was suspended as chief executive officer in June after an investigation into his behavior revealed alleged misconduct. He then teamed with investor Standard General LP to amass a larger stake in the company. The hedge fund later struck a deal to replace most of the board in return for about $25 million in aid.

Charney’s fate as CEO will be decided by a three-member committee that will evaluate findings of an investigation by FTI Consulting Inc.

The shares fell 2.2 percent to about 89 cents at 9:37 a.m. in New York. American Apparel slid 26 percent this year through yesterday.