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American Apparel's Sales Take a Nosedive

Not a great quarter for the controversial retailer.

After two quarters of flat sales growth, American Apparel took a small nosedive in the third quarter of 2014, which wrapped up on September 30. In those three months, net sales dropped 5 percent, coming in at $155.9 million as compared to $164.5 million at the same time last year. Total net loss for the quarter was $19.2 million, compared with a net loss of $1.5 million loss the same quarter last year.

The last time sales dropped this much was back in the fourth quarter of 2010, when American Apparel saw a decline of 8.9 percent. But the controversial retailer eventually got back up to double digit growth.

According to the company's quarterly financial statement, released late on Monday, comparable retail sales sunk 7 percent — online dropped 5 percent — but a 2 percent increase in wholesale sales kept overall sales from slipping that far. Gross profit took a 2 percent hit, landing at $82.5 million, a decrease the company attributes to the flagging retail and online sales. 

Of course, American Apparel's investigation of founder Dov Charney, who was ousted from his role as CEO in June after allegations of sexual misconduct surfaced, is still costing the company money. Operating expenses for the third quarter were $92.6 million, as compared to $89.1 million last year, despite the fact that expenses excluding Charney's investigation and certain settlement costs actually dropped 7 percent thanks to lower payroll and advertising costs.

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Word is still out on whether Charney will be invited to rejoin the company in some capacity, although creative director Iris Alonzo was rehired in October after getting the boot this summer.