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American Apparel reports Q4 & full year 2009 financial results
26
Mar '10
American Apparel Inc a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel, announced its financial results for the fourth quarter and the year ended December 31, 2009.

Dov Charney, Chairman and Chief Executive Officer, stated: "Despite the many challenges our business faced in 2009, we delivered on our overall goal to generate significant cash flows from operations, resulting in a substantial reduction in debt in the second half of the year. I am pleased by the discipline that has been demonstrated in managing our inventory levels and by the focused capital expenditures made in 2009. Our main goals for 2010 are to enhance the productivity of our existing base of retail stores, re-establish our level of manufacturing efficiency at our production facilities, and to continue to broaden our management team to implement best practices throughout our organization. We continue to believe that the prospects for our brand remain bright and we look forward to bringing our products and our stores to many new potential customers in new neighborhoods and new cities in the decade ahead."

American Apparel reported net sales for the fourth quarter ended December 31, 2009 of $158.1 million, an 8.6% increase over net sales of $145.6 million for the fourth quarter ended December 31, 2008. Total retail net sales increased 10.4% to $108.2 million for the fourth quarter of 2009 as compared to $98.0 million for the same period in 2008, with comparable store sales for stores open at least 12 months declining 7% on a constant currency basis. American Apparel ended the quarter with 281 stores, having added 21 net new stores during 2009. Total wholesale net sales, excluding online consumer sales, increased 6.1% to $38.5 million for the fourth quarter of 2009 compared to $36.3 million for the fourth quarter of 2008. Online consumer net sales remained relatively unchanged at $11.4 million for the fourth quarters of 2009 and 2008.

Gross margin for the fourth quarter of 2009 was 55.0% as compared to 54.5% for the prior year fourth quarter. Gross margin was favorably impacted by the depreciation of the U.S. dollar against foreign currencies in the fourth quarter of 2009 compared to the fourth quarter of 2008, and by a continuing shift in mix from wholesale to retail sales, which generate higher gross margins. These factors were largely offset by a substantial reduction in manufacturing efficiency at the company's production facilities in the fourth quarter of 2009 compared to the prior year period. The reduction in manufacturing efficiency was principally a result of the forced termination of over 1,500 experienced manufacturing employees in the third and fourth quarters of 2009 following the completion of the previously disclosed I-9 inspection by U.S. Immigration and Customs Enforcement.

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