American Apparel, Inc., a vertically integrated manufacturer, distributor, and retailer of branded fashion-basic apparel, announced financial results for its first quarter ended March 31, 2014.
Financial Performance Summary for the First Quarter of 2014
-Net sales decreased 1% to $137.1 million on a 7% decrease in comparable store sales and a 7% increase in wholesale net sales.
-Gross profit declined 1% to $72.0 million in the first quarter of 2014.
-Operating expenses decreased 5% to $79.5 million in the first quarter of 2014.
-Adjusted EBITDA improved by $2.1 million to $1.4 million for the first quarter of 2014 versus loss of $0.7 million for the first quarter of 2013.
Dov Charney, CEO of American Apparel indicated, "We are encouraged by our first quarter performance with our achieved results ahead of our 2014 business plan. The results of our cost control efforts are being seen in all areas of the business and we are now fully focused on measures to improve top line performance."
Comparing the first quarter 2014 to the first quarter 2013, net sales decreased 1% to $137.1 million on a 7% decrease in comparable store sales in the retail and online business and a 7% increase in net sales in the wholesale business.
Gross profit was $72.0 million for the first quarter 2014 versus $72.9 million for the first quarter 2013. Gross margin decreased to 52.5% for the first quarter 2014 versus 52.8% for the first quarter 2013. The decrease in the gross margin was primarily due to a relative increase in the mix of lower-margin wholesale net sales.
Operating expense was $79.5 million for the first quarter 2014 versus $83.3 million for the first quarter 2013. As a percent of sales, operating expenses decreased to 58.0% for the first quarter 2014 versus 60.4% for the first quarter 2013. The decrease includes approximately $3 million in lower payroll and associated costs, advertising and marketing, and professional fees. The reductions are largely as a result of cost reduction efforts. In addition stock compensation expense was lower by $2.3 million and equipment lease expense increased $1.0 million. In the first quarter 2014 the Company incurred $0.5 million in retail store impairment charges versus $0.1 million in the first quarter 2013.