American Apparel released its earnings report for the first three months of 2011 yesterday. It will probably come as no surprise to you that the numbers are...bad.
This is, after all, the same company that lost $86.3 million last year. And the same company that came within a hair's breadth of bankruptcy just last month, before a Canadian ice-cream billionaire took pity on Dov Charney and lent him enough money to stay in business — for now.
Sales during the three months ended March 31 fell 4.7%, to $116.1 million, when compared with the same period last year. Same-store sales, a sales measurement that controls for store openings (which artificially increase total sales but have heavy start-up costs), fell 7.9%. Same-store sales at the troubled t-shirt chain have now been falling consistently, year-on-year, for over two years. The last time American Apparel saw positive same-store numbers was in January, 2009. American Apparel's business is shrinking, and has been shrinking for more than two years. This quarter's results show no change in that trend.
There were some good signs, however: the company improved its margins, which indicates that longstanding issues with its production chain (issues which Dov Charney always likes to blame on the immigration raid that found around 1800 employees at his Los Angeles factory couldn't prove they were working legally, a segment of his workforce that Charney struggled to replace in a timely manner) are finally being resolved. Online sales, an admittedly small ($10 million) segment of American Apparel's business, grew 28.3%. And during the quarter, American Apparel lost $20.7 million. That sounds really terrible, until you remember that during the same period last year, American Apparel lost $42.8 million — so, you know, progress!