Los Angeles-based American Apparel Inc., a vertically integrated manufacturer, distributor and retailer of branded apparel, announced preliminary sales for the month ended September 30, 2013. Total net sales for September 2013 were $49.9 million, a decrease of 2 percent over September 2012. Comparable store sales for September 2013 decreased 6 percent, including an 8 percent decrease in comparable store sales in the retail store channel and an 8 percent increase in net sales in the online channel. Wholesale net sales increased 12 percent for the month as compared to September 2012. For the quarter ended September 30, 2013, total net sales increased 1 percent to $164.1 million, with a 2 percent increase in comparable sales and a 3 percent increase in wholesale net sales.
Dov Charney, chairman and CEO, commented:
“Our negative same store sales for the month of September were primarily a result of significant difficulties in the launch of our new distribution center at La Mirada, California, for which I take responsibility. A multitude of issues, including technical, planning, staffing and design and integration, resulted in distractions in various aspects of our operations, including store operations, manufacturing and product development.
“Whereas the new distribution center was supposed to be (and will become in the medium and longer term) a state of the art, best-in-class facility carrying the promise of reduced costs and faster order fulfillment, it has so far been an example of how technology–at least from a short term perspective–can sometimes work against the success of an organization. The good news is we are on track to get our distribution center in a place where it will help us build a stronger, leaner, larger and more profitable American Apparel over the next five to ten years. Despite our difficulties, I am proud that we were able to demonstrate healthy increases in sales in two out of our three sales channels, a testament to the fact that the American Apparel brand remains extremely strong and continues to resonate with consumers and wholesale buyers of clothing worldwide.
“Some additional good news is that we are planning to start opening stores again. In the next several months, we are going to open stores in Lyon, France, Stratford, United Kingdom, and Atlanta, Georgia, as well as a new flagship store in New York City. We are sensing major opportunities overseas both online and in terms of new store possibilities. Additionally our wholesale business is showing major signs of strength despite distribution challenges, and I expect same store sales to be positive in the fourth quarter in all channels, including online, retail and wholesale.”
John Luttrell, CFO, added to Charney’s statement:
“I also believe our sales were negatively impacted by weak consumer spending levels across the retail apparel sector. Although the distribution center is now performing better from a shipping point of view, we have experienced, and may continue to incur, higher than expected distribution center labor costs. In addition, if there are any further transition issues associated with the new center or if apparel sector spending is soft in the fourth quarter, our sales and financial results could be negatively impacted. However, we have recently seen week-over-week reductions in distribution labor costs, and we believe we will continue to reduce labor costs during the fourth quarter. Although we are disappointed with the additional costs and reduced sales caused by the distributions center transition, we continue to believe we will benefit in the future from our decision to invest in the new center.”
For more information, visit www.americanapparel.net.
