• Lily Allen told a British radio show that she is quitting performing for two years to open a boutique called Lucy In Disguise. She's also going to found a record label. [Elle UK]

• President Obama wore a parka to visit the Great Wall of China. "The jacket has a fleece bib and removable bucket hood, suggesting that President likes his jackets as he likes his health care bills: riddled with options," notes Women's Wear Daily. [WWD]
• Michaele Salahi wore David Yurman jewelry to that little party she crashed about a week back, if you care. [WWD]
• Japanese outfit Cross Company has bought a majority stake in Thom Browne. Which makes a certain kind of sense, since Browne's aesthetic certainly is well-suited to Japan. Haha, 'suited,' see what we did there? Sorry. Anyway, how much money Browne got to part with his controlling stake was not disclosed, and they plan to open a flagship in Japan next year. [WWD]
• Cathy Horyn, on the closure of Christian Lacroix's couture and ready-to-wear lines: "I remember taking my mother, Nancy Horyn, to the Paris ready-to-wear shows in March of 1990. She saw three — Valentino, Romeo Gigli and Lacroix. She was utterly enchanted by Gigli; it was the season of the celebrated Murano glass collection. She didn't really care for Valentino; it was, you know, not her thing. She adored Lacroix. The show that season was held in the house, on those beautiful banquettes, so it was a different experience, more like a couture presentation. Before the show we stood in the little courtyard of the house, on the steps going up to the salon, and my mother asked about so-and-so, curious about their style of dress or exceedingly impulsive hairdo. It probably all seemed very urgent, though I imagine not in the least to her." [On The Runway]
• Marc Jacobs and Lorenzo Martone closed on a nice little love nest in the Village for $10.4 million. It has a private elevator, yard, roof terrace, and a rear terrace. [P6]
• Anthropologie is moving into the Chelsea Market, at the corner of 15th Street and Ninth Avenue in New York City. [NYPost, second item]
• British designer Christopher Kane isn't having any of this Tommy-Ton-in-the-front-row nonsense: "It's a bit mad, isn't it? It feels like it's happened all of a sudden and at some shows this season the front row was just all bloggers. I think it will die down though, and people know what they are doing. No one who wants to read a serious review of a show is going to look at what a 14-year-old thinks. But it has become more critical; people can say what they want about anyone on a blog without consequences and that's quite scary. There are real repercussions for a designer if a photo of something is leaked by a blog; it can be copied in a fortnight and that can really harm a business." [Vogue UK]
• Dior Homme is launching a line of women's jeans. Women with the means to do so have been wearing Dior Homme's slim cut suits ever since Hedi Slimane was designing pants so sexy the darts alone could make you weak at the knees. Could the specifically-for-women versions be any better than those? [Vogue UK]
• You can buy Joan Collins' Dynasty costumes — along with Shirley Bassey's YSL heels — at a charity pop-up store in London, opening tomorrow. [Elle UK]
• Tom Ford smells like vanilla and has not only a Best Side but a Best Angle. He says things like, "I think of myself as a product." [NYTimes]
• Cathy Horyn likes his movie, A Single Man. [On The Runway]
• The Wall Street Journal investigates the peculiar and specific humiliation of having your once-treasured and still-fashionable clothing picked through by a snarky 19-year-old clerk at Buffalo Exchange, and found wanting. Word to the wise, as someone who used to make food and rent money by re-selling the designer "trade" I was usually "paid" in — and by scouring the $1 rag markets in LA for Lacoste sweaters and old prom dresses I could launder, repair and re-sell: Buffalo Exchange's prices are shit. They do not care if your shoes are thrice-worn Prada; they will offer you $9 for them. If you do not have the patience for eBay, go to Wasteland, if you're on the West Coast. If you're anywhere else, sew in some labels from your dad's old designer ties. Duh. [WSJ]
• Liliane Bettencourt's daughter has filed a civil case to declare L'Oreal heiress Bettencourt, the richest woman in Europe, incapable of managing her own affairs. Bettencourt gave a reported $1.5 billion worth of cash and artworks to a photographer friend, François-Marie Banier, who is already the subject of a criminal case for "abus de faiblesse," or taking advantage of the infirm. Liliane Bettencourt's lawyers reject both of the daughter's cases as an attempt to seize control of Bettencourt's assets. [Reuters]
• Someone you have never heard of before and will never hear of again was in the Victoria's Secret fashion show because she won a competition on the Internet. [AP]
• Aeropostale's third-quarter profit grew by 47% over last year's results. Same-store sales for November were up 7%, and black Friday weekend sales rose 10% on last year. Quarterly earnings were $62.6 million. [WSJ]
• Competitor Abercrombie & Fitch reported a 17% slide in same-store sales for the month of November. Analysts had expected only a 9% drop. The company's Hollister stores saw same-store sales declines of 23%. [TS]

• Michelle Obama may have skipped the CFDAs, but she'll celebrate the National Design Awards at the White House on July 24. The winners, chosen by the Smithsonian and including Francisco Costa, will participate in events around Washington. [WWD]

• The Supreme Court has agreed to hear a case involving Chicago apparel manufacturer American Needle and the National Football League. American Needle contends that the league ran afoul of antitrust laws when its 32 teams canceled their individual apparel licenses to manufacture exclusively with Reebok in 2001; the NHL says that it is, in fact, a single entity entitled to do business with whomever it likes. [Breitbart]
• U.S. Customs and Border Protection had a banner week, seizing $10 million worth of counterfeit goods. Six different intercepted shipments included fake Nike sneakers, fake Coach bags, fake Gucci shoes, and fake Louis Vuitton purses. [WWD]
• Victoria Beckham is bringing in an all-new team to design and produce her dVb denim line ahead of its relaunch, expected for next year. "Victoria makes out she's hands-on, but she doesn't sit there cutting patterns," explains an anonymous friend. Not that there was much misunderstanding on that count. [Daily Mail]
• Ed Westwick — from that show about high schoolers with credit cards — posed for K Swiss shoes, and boy does he talk about the experience as one itching to be re-hired! "They know who they are," the actor said of the company, before casually mentioning that he'd just love to do another campaign. [WWD]
• Riccardo Tisci of Givenchy talked to New York about his Spring 09 couture collection, and his just-presented Resort 09 collection. Tisci, who ascended to his position five years ago, at the age of 28, calls himself the youngest couturier in history, despite the fact that both Yves Saint Laurent, who took the reins at Christian Dior at the age of 21, and Hubert de Givenchy himself, who founded his namesake line at 25 back in 1952, were younger. [The Cut]
• Model Chanel Iman's inability to distinguish between "their" and "there" has not hampered her ability to snag an internship at Teen Vogue. In a sweet touch of near-authenticity, the Condé Nasties had her clean out the styling closet. [Twitter]
• Urban Outfitters now sells its clothes via mobile phone, for those occasions when you yearn to smell of Vincent Gallo's ballsweat and early 90s desperation, but can't find your way to a store or a computer. [WWD]
• Of course American Apparel would market its new bedding with a bunch of "Oh hai Dov, this your bed? Tee hee!" shots. [AmApp]
• In other news of products that signal the apocalypse, you can now buy an Oscar de la Renta dress for your three-year-old. [W]
• These fashion-show-throwing Manhattan middle schoolers, on the other hand, seem self-sufficient enough to never be heard wailing, "But Mommy I want an Oscar noooooooow!" [Reuters]
• Valentino's owner, the U.K. private-equity firm Permira, is in talks with the fashion house's primary creditors to relax the terms of its €2.5 billion debt. Permira bought Valentino for €5.3 billion in 2007, when such buy-outs — and the easy credit they were financed with — were common. Head designer Valentino Garavani retired within months of the deal, and the house has struggled to express a coherent creative vision since his departure. [ToL]
• Madonna's wholesale transformation of her boy-toy, Jesus Luz, into a real runway model is proceeding apace. After his exclusive appearance on the Dolce & Gabbana runway for Milan's men's wear week, he headed to Paris — unburdened by any exclusive deal — and promptly racked up a spot in Givenchy's lineup. His outfit included studded gladiator sandals, harem pants, and a very busy floral/plaid shirt. [The Cut]
• Esteban Cortazar and Mounir Moufarrige, the C.E.O. of the house of Ungaro, continue to do the will-they-won't-they dance around rumors of designer Cortazar's departure. Cortazar was at the Ungaro men's wear show in Paris and, when asked about his differences with management, said "For now I am here." Moufarrige, for his part, when asked if he would be retaining Cortazar's services into the future, said, "He's here," and pointed at the runway. [WWD]
• The rumor that Pierre Cardin's Chinese shoe and leather goods licensee was in talks to take over the French brand outright has been denied by both Pierre Cardin and the shoemaker. [Reuters]
• American retailers just can't catch a break. If it's not the recession, the rising unemployment rate, or the precipitous drop in consumer spending, it's the risk of tornadoes and unseasonal torrential rain keeping the customers from their stores. [WWD]
• Versace saw a 13.4% decline in revenue during the first quarter of this year, but its sales results were stronger during the months of May and June, company chairman Santo Versace reported. [Reuters]
• Maybe part of the reason that Aéropostale is outperforming competitors like Abercrombie & Fitch to such a large degree is due to the fact that the company spends 80% of its marketing budget online, online being where most of its customers are? [WWD]

• How cool are these Charlie Brown New Balance sneakers? Cool enough that we wish they weren't just for kids. [WWD]
• A London artist has created Kate Moss and Agyness Deyn paper dolls which look frighteningly like the real thing. [Pipeline.Refinery29]

• Your daily dose of the horrible: American Apparel shiny leggings for children. [Fashionista]
• Police in France have arrested 25 suspects in relation to last December's $118 million jewel heist at Harry Winston. Members of the alleged ring had been under police surveillance for months, and when arrangements had been made between the gang and some prospective buyers, the authorities swooped in. In addition to the 25 arrests, police found weapons and $345,000 in cash. [AP]
• Nicole Richie swears that her next collection for her House of Harlow 1960 jewelry line will be completely different than the first. In fact, it'll be "focusing more on old English, equestrian and more sophisticated looks" than the flea-market-inspired first trip out the gate. Richie's shoe and accessory lines, meanwhile, will be ready for Spring 2010. [People]
• Dolce & Gabbana, newly internet-savvy, uploaded Fall 2009 Dolce & Gabbana and D&G campaigns to its just-launched website. Steven Klein shot Mariacarla Boscono, Edita Vilkeviciute, and Heidi Mount at a casino for Dolce & Gabbana, and Mario Testino shot Katie Fogarty, Sara Blomqvist, Stephanie Rad, Hanna Rundlof, and Ragnhild Jevne for D&G. Heidi Mount also wears a giant pink Margiela-inspired fur and poses like an ape in one. [Fashionologie]
• The New Yorker sure knows how to give a bad restaurant review. Taking in the "sterile" and "unexuberant" fare at Armani's restaurant-within-a-store on Fifth Avenue, Lauren Collins writes: "At the bar, a manager and a bartender argued, loudly. The dispute seemed to be about a pen. Their passion did not extend to a pair of women who were waiting for a table, or, once the women were seated, to their full glasses of wine, paid for and awaiting transferral." [NYr]
• A historic Christian Science church on Park Avenue took a look at its dwindling congregation and finances, and its stellar real estate, and do the obvious thing: allow a catering company to use its building to host events, in return for necessary repairs, money, and continued access for regularly scheduled services. Even though the kind of events we're talking about here — shindigs with Sir Paul McCartney, Oscar de la Renta runway shows — are hardly Bushwick artist loft keggers, the Park Avenue set has gone all guerrilla in its opposition to the church's activities. One neighbour even parked her car in the middle of the avenue to block the access of de la Renta's show's guests. Is it too much to hope she was towed? [NYTimes]
• A maker of hypoallergenic beauty products has decided to associate its line with the 11th birthday of Malia Obama. Tacky. [US News]
• Natural cosmetics purveyor Dr. Hauschka is apparently swamped by demand — but, because of quality control concerns and its business philosophy based on the ideas of Rudolf Steiner (no, really), it's unwilling to expand too quickly. [Reuters]
• The website for MDLR, Moises de la Renta's fashion line, is now live. [MDLR]
• French documentarian Loïc Prigent, who made the excellent Marc Jacobs & Louis Vuitton and Signé Chanel, about the putting together of a Chanel couture collection, has a new series showing on Sundance starting September 10. Prigent's camera follows Sonia Rykiel, Proenza Schouler, Karl Lagerfeld, and Jean-Paul Gaultier in the last 36 hours before their respective runway shows. (It's a good thing Prigent is sensitive to the dramatic tension of a smoke break, because there'll be a lot of them.) Rykiel's show is her 40th anniversary extravaganza in Paris last October, Prigent finds Proenza Schouler and Fendi, designed by Lagerfeld, at the Fall/Winter 2009 collections of this Spring, and he'll catch up with Gaultier at couture week in Paris next month. I'm marking my freaking calendar. [Glamour]
• Looks like there's been a breakdown at Alessandro Dell'Acqua. The designer, whose namesake label has been owned since 2003 by Cherry Grove, an Italian corporation that produces high-end clothing, released an open letter informing the fashion world that he, Alessandro Dell'Acqua, would like to publicly distance himself from the Alessandra Dell'Acqua men's Spring/Summer or women's Pre-Spring collections, the former of which is about to walk in Milan, because he hasn't been given the opportunity to do anything beyond submit sketches to Cherry Grove. Alessandro Dell'Acqua lost his job with the Italian house Malo after holding it for less than a year following Itierre's bankruptcy; this angry letter reads like a gold-plated invitation to be fired from his own label, too. [FWD]
• Once every media outlet had dutifully covered the "outrage" over the Steven Meisel-shot Calvin Klein "foursome" billboard in SoHo, the brand replaced it with a tamer shot of a girl in a red bikini. Racked has a picture. [GoG]
• Well, lookie here: a male model who admits to having to maintain a diet to be catwalk skinny. [NYTimes]
• Everyone knows Abercrombie & Fitch has been struggling in the recession, and losing market share to lower-priced competitors like Aéropostale and The Buckle. Besides quietly breaking its rule against discounting its own stock and closing its Ruehl chain, the company hadn't exactly said what it was planning to do to reverse the tide that saw its May same-store sales slide a whopping 28% — until now. The proffered solution? Two hundred and ten store leases, which comprise some 20% of the chain's total, are up for renewal over the next two years. Abercrombie thinks it might save money by not renewing all of them. Revolutionary. [TS]
• A three-story Adidas factory in India was engulfed by flames on Tuesday night. There were no casualties. [HindustanTimes]
• Talbots may have had to cut 370 jobs, eliminate its 401(k) matching contributions, and suspend its quarterly stock dividend, but that won't stop it paying CEO Trudy Sullivan $1.2 million this year. Richard O'Connell, the struggling company's real estate and legal executive, will also get a 23% raise, to $500,000. [TS]
• Gen Art, an organization which supports emerging fashion talent in the U.S. and has helped launch the careers of such names as Vena Cava and Zac Posen, is in a bad spot financially. Already reeling from layoffs, the founders hope to raise $250,000 in ticket sales and donations for their 15th anniversary party tomorrow night. Gen Art needs another $500,000 after that to continue its operations. [WWD]

• Helena Christensen is one of the many hailing British Vogue's Alexandra Shulman. "Obviously I am of the same belief," said the supermodel photographer. "Aren't we in a business that is supposed to explore all kinds of shapes and silhouettes?" [WWD]

• H&M is famous for its sought-after designer collaborations. Matthew Williamson's of this summer being just the latest in a long, mostly successful, line. But the Swedish fast-fashion giant has never brought a high-profile shoe maker on board — until now. Behold: Jimmy Choo for H&M. Jimmy Choo accessories collections for women and men will be in 200 stores November 14. [Reuters]
• Designer Malcolm Harris, of the label Mal Sirrah, hung up on Angelina Jolie when she rang to inquire about one of his dresses. Twice. Harris thought it was a prank; Jolie still bought three of them for $225 apiece. [P6]
• So how did designer Zac Posen get ready for the CFDAs? "I was on Perez Hilton all day." [The Cut]
• Claire Danes and Hugh Dancy are getting hitched, and, no surprises here, Danes is choosing her favorite designer (and CFDA date) Narciso Rodriguez to make her wedding dress. The actress says the process is "intimate" and often makes her "weepy." [People]
• Rodriguez even whipped out a needle and thread to repair the train of Danes' dress at the CFDAs after a fellow guest stepped on it and it ripped. [NYDN]
• Kanye West went on a $5,000 spending spree at a Chicago store called Deliciously Vintage. With no lady in sight while he shopped, speculation is rife as to who'll get the haul. Amber Rose? Kanye himself in the privacy of his own multi-million dollar home? Rife, we say. [TMZ]
• Vera Wang was unwilling to confirm that she would be on the next season of Dancing With The Stars at the CFDAs. "They approach a lot of people, not just me," said the designer. As for going on the show, "We haven't decided. They haven't and I haven't." [The Cut]
• Esteban Cortazar, the young Colombian designer who has helmed the troubled house of Ungaro since 2007, says he is still at the company. Despite rumors of an acrimonious split, and a lawsuit on the part of Cortazar, at the CFDAs he told journalists "I am still there," but admitted, "We are trying to work things out. We have had some differences but hopefully things will work out for the best, whether I am there or not." [WWD]
• Agyness Deyn, says an anonymous friend, is considering quitting modelling and moving back to London to pursue roles in British indie films. [Mirror]
• Karl Lagerfeld made his transition into film — assuming we're not counting the excellent doc Lagerfeld Confidential — by providing the voice for an animated kid's movie villain. The designer apparently worked hard through take and re-take, bringing his famous perfectionism to bear on the character of a bitter ex-model who kidnaps people in order to "fabulous" them, or turn them into his own image. "He was very serious about it and very open to criticism," said his spokesperson. [WWD]
• Super-stylist Nicola Formichetti: "I hate the whole idea of celebrity in America. It's so boring — all fake smiles and big business. It seems like you can sell crap if you put a famous name on it. America's crazy, you know?" [The Cut]
• Eddie Van Halen's held a copyright on the famous red, black and white striped pattern of his Frankenstein guitar since 2001. So how did it end up adorning the soles of a bunch of Nikes? The rocker's lawyers sure wanna find out. [WWD]
• Sales are so bad at the Gap that the company might use a different advertising agency for its holiday campaign, after a seven-year unbroken streak with the same house. [AdAge]
• Also agency shopping: Zappos. [BrandWeek]
• Check out the new Isabel Toledo exhibit at the Museum at FIT on video. Ms. Toledo and her husband are on hand to talk about their history in fashion, and that dress that Michelle Obama wore that one time on the Mall. [The Cut]
• Aeropostale, one of the mall chains whose business isn't hanging by a thread during the recession, plans to launch P.S., a new line for 7-12-year-olds. [WWD]
• MTV VJ Alexa Chung once said of her retirement, "Modelling gave me a distorted body image. As soon as I stopped, I realised how ridiculous it all was. I went on about it because I was really fed up with modelling –- it's like I was saying negative things to reinforce in my mind that I had to get out. I never say or think those things now. I've used up all that neurosis –- there's none left. It's just really boring. I'd rather have a bigger brain than smaller bones." Apparently, Chung still models — when the project suits her. She's turned up in the look book for quirky L.A. label Wren. [Fashionista]
• A worker at London's Oxford St. Topshop flagship has a confirmed case of the H1N1 swine flu virus. The store reportedly sees over 200,000 visitors a week. Topshop has no plans to close it. [Racked]
• Giorgio Armani is set to unveil his latest scent, Idole d'Armani, next month. Polish actress Kasia Smutniak will be the face of the brand. [Reuters]
• Calvin Klein designers Italo Zucchelli and Francisco Costa defend their racy billboard against the pearl-clutchers of SoHo. (Or something.) Said Costa, "There was no intention of making that controversial. Just make beautiful ads. And they're beautiful ads. And I think, you know, we're such a forward society, but we tend to be a little prudish sometimes. It's New York City! It's the 21st century! Honey, we have to move on!" Zucchelli called the ad "In the best tradition of Calvin Klein," and said, "It's my favorite campaign ever! ...Everyone needs to be scandalized and screaming. That is what we want." [The Cut]
• The economy goes one way, shoplifting statistics go another. [WWD]
• Sophia Kokosalaki is moving to helm Diesel's Black Gold line. [WWD]
• After the hash-up of a bankruptcy auction, eventual owners of the Filene's Basement chain, Syms and Vornado Realty, say they want to proceed with their purchase as quickly as possible. [WWD]

• Funny, this picture of Amy Winehouse looking "healthy and stylish" still looks off. British label PPQ is bringing the troubled singer's long-rumored fashion line to fruition — if you count PPQ "providing all materials and doing the design," as anything like having your own collection. [This is London]

• Here are about 500 words on how Michelle Obama sometimes lets the press know what she is wearing, and sometimes doesn't. [WWD]
• Designers at Sao Paulo Fashion Week have agreed to cast a minimum 10% quota of models of African or indigenous South American descent. Last year, only 2.3% of the models — 8 girls out of 344 — were non-white. The quota will be enforced by a hefty $120,000 fine. [BBC]
• In more news from the annals of New York real estate envy, Sally Singer, fashion news and features editor of American Vogue, lives in an eclectic apartment in the Chelsea Hotel. [The Selby]
• Pat McGrath, one of the sweetest and most talented makeup artists around, was in New York to publicize Dolce & Gabbana's new makeup line, which she helped develop. What McGrath would like most, however, would be the fountain of youth in a pill, or her own, namesake line, like François Nars, Laura Mercier, and Bobbi Brown. One of those things just might come true, in a just world. [NY Times]
• Since Gisele and Tom got married and became 78% more boring, voilà: your new model/quarterback couple is Hilary Rhoda and Mark Sanchez of the Jets. [P6]
• Complicated modern woman Miuccia Prada: "If you compare with philosophy, [fashion] is frivolous, but frivolity may be something good, something that is part of our lives, so I don't dislike it and what I like is the mix, that in your life you can have serious things, [and] more frivolous ones...Beauty is not something that is contrary; it is the right of everybody." [CNN]
• Thierry Mugler earned a kind of fashion comeback when Beyoncé chose him to design the costumes for her current world tour. And why not? Cinched waists, severely cut skirts, and padded shoulders are everywhere now. While Mugler has no plans to re-start his label, which he had already sold to Clarins long before he quit designing in 2000, this profile explains just how a ballet dancer from Strasbourg came to fashion prominence, via driving a van around Afghanistan and living in the Haight-Ashbury in the late 60s. Interesting start for a man who's made all his money from perfume since 1992. [Telegraph]
• "I don't like most perfumes," says Nicole Miller. Which is why she had to make another one of her own! Perfectly logical really. [WWD]
• And Armani, too, has a new perfume. His scent pays tribute to his muses. [WWD]
• How does El Museo Del Barrio in New York raise funds? Why, by getting Isabel and Ruben Toledo to tutor students from Spanish Harlem in art, and then auctioning their work — "portraits of Latin icons like Salvador Dalí and Christina Aguilera," reports Style.com. Also, by throwing a kick-ass party where Gloria Estefan took the stage. [Style.com]
• Burberry, which moved into the space vacated by New York magazine on Madison Avenue, will turn on its big neon sign next Thursday. Designer Christopher Bailey and CEO Angela Ahrendts will fly in from London for the vernissage. Neon signs of this type aren't normally permitted in that part of Midtown, but because of New York's iconic sign, now dismantled, Burberry has a rare opportunity to grandfather its own in. [HintMag]
• Oh, how cute. The Daily Mail have an anonymous fashion mole. Today, s/he reveals that — gasp — models aren't paid very much (but do get to meet a lot of the rich menz, which we of course totally love, since we're all privileged alphas doing this to snag hubbies anyway) and are often required to change their names. For practical reasons, such as our agencies not wanting four "Jennifers" on their books. Shocking. [Daily Mail]
• Aeropostale's profit for the first quarter grew a whopping 81% on last year. Sales were up 21%, and same-store sales jumped by 11%. [The Street]
• First quarterly profits at Gap Inc. dropped by 14%. [WSJ]
• Aquascutum's chief executive Kim Winser has resigned after the rejection of her bid to buy out the company. [WWD]
• Designer denim sales are one thing that is not going soft in the current economic climate — high-end jeans sales grew by 2.3% in the quarter just ended. [LA Times]
• Brooks Brothers luggage: launching just in time to take to Southampton for the opening of the summer place. What a relief! [WWD]
• Linda Morand, who runs this website — probably the best compendium of 60s fashion magazines out there, and the members who scan and post to it care about identifying models to boot — is to be one of the producers of a two-hour television tribute to the supermodels of the last six decades. The idea is to make it an annual event, and impanel judges of industry prominence to induct models into it. I can't lie; I would probably watch this. Especially if it turns out better than the Vogue/VH1 Fashion Awards. God knows I've happily killed far more than two hours on MiniMadMod60s. [PR Newswire]

Relatively speaking, a 3% increase in same-store sales for the month of December 2008 isn't terrible only in the sense that it's not actually a decline — such as that experienced by the retail sector as a whole, where same-store sales shrank 0.9%, and by individual competitors like Abercrombie & Fitch and the Gap, whose December sales were down by over 20% on 2007's numbers. But let's not forget it's also not stunning. The previous year, American Apparel managed to raise December same-store sales by 37%, which makes 3% look flat. And it's simply not true that chain stores are uniformly blighted: Aeropostale and the Buckle's same-store sales rose 12% and 13.5% for December. If there's anyone "bucking the trend," it's those players, not Dov Charney, whose stock price is trading right now at $2.06, off a 52-week high of $13.25. (Or, I suppose, up from a 52-week low of $1.55, depending on how you look at it.)

For once, the company's financial situation is in the news, instead of its sexual sexy sexing ad campaigns or the sexifying sexual harassing antics of its founder. (Not that either of those things are likely to change — the company considers the former a key to its future growth, and maintains a $20 million insurance policy just in case the latter should happen to recur.) The American Apparel bottom line is the subject of a good, long, detailed story in Women's Wear Daily; reading it, I was reminded of Warren Buffett's quote about only finding out who's been swimming naked when the tide goes out.

American Apparel's early financial wackiness — a CEO who was prone to spending lavishly on inessentials like apartments and vibrators for favored underlings, a hamfisted, starry-eyed approach to expansion that saw 260 stores open in just a few years (for one of those years, 2005, the company did not actually find the time to replace the CFO who died of a [coincidental?] heart attack, preferring to delegate bookkeeping to young staffers), and a factory that, once it was properly managed, increased daily production from 32,000 pieces to 250,000 pieces without adding staff, all financed by a phenomenal debt load — meant that when the company went public, it could not do so via a traditional initial public offering. Instead, it was quietly bought by a shell company, Endeavour Acquisitions, run by a vaguely dodgy D.C. businessman and a financier from New Zealand, who took the company public while avoiding the scrutiny and regulatory oversight of an IPO. It was a way of buying time; things weren't going to change overnight — on the eve of the deal, a true to form Charney told a Wall Street Journal reporter the company's eventual choice for its new CFO was "a complete loser" and a real stickler for details — but the idea was American Apparel would slowly get its house in order. Then the economy as we know it more or less ended, and now WWD reports their balance sheet looks like this:

As of Sept. 30, the company had a total of $111.6 million in debt and $13.9 million in cash.

Leverage, thy name is Dov.

But the mere fact that the company's sales are not decreasing is enough to garner some praise in the current market. It has had to refinance with its two major creditors — Bank of America, which provides $75 million in revolving credit, and a private firm called SOF Investments, which loaned Charney $51 million — and agree to tougher terms including penalty fees, downgrading its credit facility by 200 basis points, and a commitment to limit capital expenditures to less than $17.8 million in 2009. (Which, for American Apparel, which likes to open stores by the baker's dozen, is some extraordinary thrift.) Technically, if it can't refinance with SOF Investments again by March 21, Bank of America's entire loan obligations will come due immediately, and, not to put too fine a point on it, if that happens there is no way they could pay up. But this is viewed as an unlikely prospect, because, in the words of retail analyst Todd Slater, "American Apparel is more valuable to them as a going concern than a bankrupt one."

If this sounds familiar to you, it might be because according to the Wall Street Journal, in 2005 — the year the chain opened 65 stores despite not having a CFO — then-primary lender U.S. Bank urged the company to seek additional financing. Unable to do so, American Apparel defaulted on its loan agreements. Because that was back when you could get a home loan with no income, no job, and no assets from a mortgage officer who was on meth, the loans were renegotiated and a new private investor was found (albeit one whose audit of the company, oopsie, uncovered American Apparel's reported growth figures for the year were off by 30%). Would the current credit market be so forgiving if the worst should happen again? I think we all know the answer to that.

American Apparel is a survivor, for now. But I don't understand why the reaction to WWD's story has been uniformly positive: 3% growth, a share price in the crapper, and tough credit terms that led one analyst to downgrade 2009 earnings per share estimate by 9 cents aren't exactly the marks of a paragon of financial health, even in this economy of lowered expectations. American Apparel more or less admits to running raunchy ad campaigns to distract customers from their admirable but irritatingly wholesome sweatshop-free American-made production; the company even pushed out employees it considered "WTO" and "so '99" in 2005 and 2006. Perhaps their sex-drenched image similarly distracts some financial reporters from maintaining perspective on the basics.

The Complicated World Of American Apparel [WWD]

Related: American Apparel Bares All [WSJ]
Ledecky's Black Check Is No Blank Slate [Washington Post]
Bucking The Trend [National Post]
Retail Winners And Losers [The Street]

Earlier: Working At American Apparel Is Not All It's Coked Up To Be

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• If you or someone you know is interested in (cough) modeling for American Apparel, they're having an open call. Dov Charney takes this sort of thing seriously; chances are you'll get to meet him one-on-one! [American Apparel]
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