Online sales soar at American Apparel
American Apparel Inc, a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel, announced financial results for its third quarter ended September 30, 2011.
Comparing the 2011 third quarter to the corresponding period last year, the Company reported that:
• Net sales increased 5% to $140.9 million on a 3% increase in comparable store sales in the retail business and a 10% increase in net sales in the wholesale business;
• Gross profit of $75.0 million increased 7% or $4.8 million in this year's third quarter;
• Consolidated Adjusted EBITDA increased to $6.4 million vs. a loss of $0.8 million in last year's third quarter;
• Loss per common share of $0.07 vs. a loss per common share of $0.13 in the prior year third quarter.
"I am encouraged by the improvement in our third quarter financial performance and continued momentum of our business," said Dov Charney, Chairman and CEO of American Apparel, Inc. "In the month of October, we saw strong sales in the U.S., Asia, Australia and Europe markets. For the year, we have also seen record sales in our online channel.
"With the combination of improving sales, a reduction in raw material prices and continued efficiency in our manufacturing processes, we believe the prospect is favorable for further improvement in our fourth quarter and fiscal 2012 financial performance. "
As previously disclosed, the Company began including online sales in its comparable store sales calculations in the third quarter. For purposes of comparison in this press release, third quarter 2010 sales have been recalculated on a comparable basis.
For the three months ended September 30, 2011, total comparable store sales increased 3% on a 2% increase in retail store sales and an 11% increase in online sales. For the three months ended September 30, 2010, total comparable store sales decreased 15% on a 16% decrease in retail store sales and a 4% decrease in online sales.
Gross margin for the third quarter of 2011 was 53.2% vs. 52.2% for the corresponding period last year. The increase in gross margin was primarily due to an increase in sales prices across our sales channels and continued improvement in manufacturing labor efficiencies that began in the second half of 2010, partially offset by lower manufacturing volumes and the resulting lower absorption of fixed expenses. While gross margin improved in the quarter, much of the inventory sold in the current period was produced in prior periods when raw material costs were higher.
Loss from operations was $2.6 million for the third quarter of 2011, an improvement of $5.4 million from a loss of $8.0 million in the third quarter of 2010. The improvement was the result of higher sales, improved gross margin rates, lower distribution expenses and lower store operating and selling expenses, partially offset by an increase in general and administrative expenses. General & administrative expense increased due to increases in stock-based compensation and salaries and wages, partially offset by a decrease in professional fees.