Financial Performance Summary for the Three and Nine Months Ended September 2013
-For the three months ended September 30, 2013, net sales increased 1% to $164.5 million on a 2% increase in comparable store sales and a 2% increase in wholesale net sales.
-For the three months ended September 30, 2013, adjusted EBITDA was $3.8 million vs. $13.3 million in the 2012 third quarter.
-For the nine months ended September 30, 2013, net sales increased 5% to $464.8 million on a 5% increase in comparable store sales and 6% increase in wholesale net sales.
- For the nine months ended September 30, 2013, adjusted EBITDA was $11.0 million vs. $18.8 million in the nine months ended September 30, 2012.
- A substantial majority of the decrease in adjusted EBITDA for each period was a result of transition and start-up costs associated with the conversion to the company's new distribution center.
According to John Luttrell, Chief Financial Officer of American Apparel, Inc., "Our lower EBITDA performance was substantially impacted by events surrounding the transition to and opening of our new distribution center. However, we believe that these issues are now substantially behind us, and although there will be some remaining transition costs in the fourth quarter of 2013, we do not anticipate that these transition and start-up costs will negatively affect our financial performance in 2014.
Sales momentum for the quarter was positive despite weak U.S. apparel sector demand. Our sales were also impacted by the distraction from the distribution center transition and by late product deliveries. This contributed to a substantial increase in out of stock positions for some of our most popular styles. We also believe we missed sales opportunities by not carrying enough inventory of top selling items to meet both retail and wholesale demand."
According to Dov Charney, Chairman and CEO of American Apparel, Inc., "No question we had a rough 3rd quarter, although I think it is important to emphasize that most of the challenges we have faced were primarily technically oriented and we believe these challenges are substantially behind us. That being said, I am confident in three things: our brand is strong, our customer is energized, and our product line is being well received. I believe American Apparel is a company that can grow significantly."
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