Challenging as circumstances are at Gap and Coach, neither of their CEOs, I imagine, is envious of the task set before Paula Schneider, who was installed as CEO of American Apparel in December, replacing a string of interim CEOs who had taken the reins following founder Dov Charney's ouster last June.
On Monday, American Apparel announced that net losses amounted to $26.4 million in the first three months of the year, compared to a net loss of $5.4 million during the same period in 2014. Sales fell 9 percent to $124.3 million year-over-year — which may not seem too bad, until you consider that even before Schneider's appointment, the company had been seeing many consecutive quarters of flat or declining sales and mounting losses.
Schneider cautioned that the company is in "the initial phase of a multi-year strategic turnaround plan" that "will require time." In the first quarter, Schneider said the company focused on "significantly reducing slow-moving merchandise," taking a temporary hit on sales and margins in the hopes of improving its store merchandising in the months to come. Product development, merchandise planning, operational and financial planning, inventory management, procurement and demand planning are also in the midst of a restructuring — all while the company continues to battle lawsuits from former employees, shareholders and an investigation from the SEC. To outside observers, the most obvious signs of change are in the company's advertisements, which have replaced the sexually suggestive images of yore with photographs that intend to correlate female empowerment with hard work.
To help fund that turnaround, American Apparel announced that it plans to sell another $10 million in stock, adding to the $15 million loan it took from Standard General in March. The company currently has $21 million in cash in its coffers.
Shares were trading down nearly 8 percent to 60 cents a share on Tuesday morning.