American Apparel Says It May Have to Close Its Stores

by San Antonio Attorney

Struggling fashion retailer American Apparel has announced that its financial situation has declined so critically that it is no longer certain whether it will be able to sustain its business. This has been the company’s latest warning to investors with regards to its prospects.

American Apparel is in dire situation, facing lawsuits from its founder and running out of cash.

The founder and former CEO of American Apparel, Dov Charney, was removed from position last year and replaced by Paula Schneider in January. The company is still in dispute with Charney.

Its recent sales report showed that income has dropped 17.2% to $134.4 million. The company does not expect its sales to significantly improve over the next 12 months, so it will probably run out of cash to continue its operations within that period.

American Apparel said it has dealt with Capital One by amending an agreement with the lender. The clothing manufacturer is considering raising new equity, restructuring and refinancing debt to save the company.

The next debt payment is $13.9 million due in 2 months. The amount is more than its available cash and greater than its existing credit line. The company has a long-term debt of almost $235 million.

Two months ago, American Apparel launched a plan to pull through by making its stores more enticing and improving its merchandise, instead of employing sexist marketing.

But the company has a slim chance of avoiding bankruptcy considering its shares were trading at 14 cents last Monday. This year, the share price has fallen 87%.

Whether it’s because a company had a great product or service but the timing was wrong or overextended itself, bankruptcies can come about to any-sized business at any time. When your business is on the brink of bankruptcy, San Antonio Attorneys can help you explore your options in advance to make the course of action much less agonizing and make recovery more attainable.

 

Leave a Comment

Previous post:

Next post: