American Apparel, Inc., a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel, provided financial results information.
Preliminary unaudited financial results for 2013 are as follows:
-Net sales of $634 million, an increase of 3%.
-Comparable store sales including online sales, an increase of 3%.
-Wholesale net sales of $180.7 million, an increase of 4%.
The Company estimates for the year ended December 31, 2013 adjusted EBITDA will be between $7 million to $9 million as compared to $36.6 million for the year ended December 31, 2012.
2014 Sales and EBITDA Guidance
For 2014, we are projecting net sales between $634 million and $658 million based upon a flat to 4% overall increase in net sales.
Adjusted EBITDA is estimated in the range of $40 million to $50 million. Capital expenditures are estimated at $12 million with a marginal number of new store openings. Raw material costs are estimated at current prices and foreign currency exchange rates are estimated to remain at current levels.
According to Dov Charney, Chairman and CEO of American Apparel, Inc., "The challenged implementation of our new distribution center had a material negative impact on the Company in terms of actual costs as shown in the above table (estimated at $14.9 million). Naturally, the disrupted flow of merchandise to our stores, wholesale clients, and online customers had an immediate negative impact on sales.
These disruptions impaired our ability to react to demand trends and properly plan production flows and resulted in production cost overruns and excessive overtime charges. However, the La Mirada Center has been operating as designed since mid-November. Our distribution costs have dramatically declined and in January they were substantially less than what we incurred last year. Although we expect to make further cost improvements, the vast majority of the needed cost reductions have already been implemented.
We expect that 2014 sales and costs will be enhanced by the operation of the La Mirada facility. Although this was a painful and costly endeavor it was necessary in order for us to achieve the future productivity and growth potential associated with the American Apparel brand.