American Apparel reports first Quarter financial results
19 May '09
5 min read
Store pre-opening expenses were $0.7 million in the first quarter of 2009, versus $1.3 million in the prior year first quarter. Unallocated corporate expenses increased 7% to $10.7 million from $10.0 million in the first quarter a year ago.
Operating loss for the first quarter of 2009 was $3.9 million, versus operating income of $4.4 million in the prior year first quarter. Operating margin for the first quarter of 2009 was negative 3.4%, versus 3.9% in the first quarter 2008.
Interest expense for the first quarter 2009 increased to $7.6 million from $3.3 million in the first quarter 2008. The increase in interest expense was largely attributable to the increase in amortization of and early extinguishment of deferred financing costs primarily related to the extension of the Company's prior second lien credit facility in December 2008, as well as increased collateral monitoring fees on behalf of the Company's senior lender.
The amortization and early extinguishment of deferred financing costs amounted to approximately $4.7 million in the first quarter of 2009, and collateral monitoring fees of approximately $0.4 million.
The Company's effective tax rate in the first quarter of 2009 was 32.7% compared to 35.7% in the prior year. Significant items which contributed to the reduction of the effective tax rate from the statutory rate included benefits from the domestic manufacturer deduction, the net impact of empowerment zone credits, and the benefit from a lower corporate tax rate in Canada.
Net loss for the first quarter of 2009 was $9.0 million, or a loss of $0.13 per diluted share. Net income for the first quarter of 2008 was $1.1 million, or earnings of $0.02 per diluted share.
In light of the results of the first quarter, and the Company's business performance so far in the second quarter, the Company reduced and gave further detail to its financial guidance for 2009. The Company currently expects consolidated net sales in the range of $550 to $575 million, and income from operations in the range of $40 to $50 million. The Company expects depreciation and amortization for the year of approximately $25 million.
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