American Apparel is going to have to start selling a whole lot more mom jeans.
The retailer, which has been struggling to get out of its financial mess for as long as we can remember, has just released its pretty dismal preliminary 2013 financial results.
While net sales are up slightly -- 3 percent from 2012 -- pre-tax earnings are way down, to an estimated $7 million to $9 million, compared to $36.6 million in 2012.
Net loss for the year is expected to come in at $122.1 million, compared with a $37.2 million net loss for 2012.
The company spent 2013 trying to restructure its business. It blames much of its earnings decrease on costs associated with production and a new distribution center. "Naturally, the disrupted flow of merchandise to our stores, wholesale clients and online customers had an immediate negative impact on sales," said Chairman and CEO Dov Charney in the filing. "These disruptions impaired our ability to react to demand trends and properly plan production flows and resulted in production cost overruns and excessive overtime charges."
But its outlook for 2014 is better, as Charney claims the center has been "operating as designed since mid-November," and costs have gone down. "Although this was a painful and costly endeavor it was necessary in order for us to achieve the future productivity and growth potential associated with the American Apparel brand."
Adjusted EBITDA for 2014 is estimated in the range of $40 million to $50 million. Capital expenditures for the year are estimated at $12 million with a marginal number of new store openings. "We invested substantially in our infrastructure in 2012 and 2013 and almost all of these projects have been implemented," said Charney. "We expect 2014 to be a year where we return our full focus to exploiting the strength of our brand and delivering exceptional service to our retail and wholesale customers. We are committed to delivering a return on the investments we have made in our business."
So far this year, though, sales haven't been great, but also not horrible. In both January and February, net sales were down 1 percent from the year prior. In February, comparable sales decreased 5 percent, including a 7 percent decrease in comparable store sales in the retail store channel and a 3 percent increase in net sales in the online channel. Wholesale net sales, however, increased 9 percent over the prior year.
To make matters worse, AA is also in trouble with the New York Stock Exchange, who notified the company that it has fallen out of compliance. By Mar. 21, it must provide a plan outlining how it intends to regain compliance. Otherwise, it could be delisted.
The company hired on restructuring advisers earlier this year, so hopefully that will help it get back on track.
Sorry, Dov. We are honestly stressed out for you.