American Apparel Inc. shares fell more than 17 percent Tuesday, a day after after the trendy apparel maker reported a first-quarter net loss worse than Wall Street expected.
After the markets closed Monday, the Los Angeles manufacturer, distributor, and retailer reported a net loss of $9 million (13 cents per share), compared with net income of $1.1 million (2 cents) a year ago. Analysts surveyed by Thomson Reuters had expected a loss of 5 cents per share.
The company blamed the loss on lower same-store retail and wholesale sales, plus higher expenses.
Net sales, including revenue from 10 stores opened since the beginning of the year, rose 2.4 percent to $114 million. Total retail sales were up 57 percent, but total wholesale sales were down 22 percent. Operating expenses rose 21 percent to $69.3 million due to higher payroll, rent and occupancy expenses.
?espite very challenging dynamics in the wholesale market and in retail, I continue to believe that the American Apparel brand is well-positioned for the long term,?Chief Executive Dov Charney said in a statement.
The company said it now expects 2009 revenue in the range of $550 million to $575 million, down from a $575 million to $600 million range given in March. Analysts on average are expecting revenue of nearly $577 million.
Lazard Capital Markets analysts on Tuesday downgraded the company's shares from "buy" to "hold".
American Apparel shares, which had closed up 7.5 percent Monday on news that Woody Allen settled his lawsuit with the company, at midday Tuesday were down 96 cents, or 17.5 percent, to $4.51 on the New York Stock Exchange Alternext.
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