American Apparel Spent Over $1 Million on Dov Charney's Suspension

The company's net losses in Q2 were also deeper than expected.
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Eliza Brooke
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The company's net losses in Q2 were also deeper than expected.
An American Apparel store. Photo: Andrew Burton/GettyImages

An American Apparel store. Photo: Andrew Burton/GettyImages

Last week, American Apparel filed a preliminary report of its second quarter earnings, disclosing a $15 million net loss for the three months ending June 30. Thanks to the recent turnover in its board, American Apparel had delayed an official report on its finances to give its new members time to review the results. As it turns out, that $15 million estimation fell a bit short of the mark: In a finalized report, the company stated Monday that its losses actually came out to $16.2 million, down from $37.5 million last year.

As expected, sales remained flat relative to the second quarter of 2013, clocking in at $162.4 million. While comparable retail store sales decreased 6 percent, wholesale net sales rose 9 percent; all in all, gross profit dropped 2 percent to $82.4 million.

Much more interesting, of course, is the amount of money the company has spent on dealing with Dov Charney. The company reports a $2 million increase in professional fees for the period, "the majority of which was related to the suspension of Dov Charney as President and Chief Executive Officer of the Company." 

To its benefit, American Apparel offset that with a concerted $2 million reduction in advertising and marketing expenses, along with $4 million in lower payroll. So at least there's that.