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Improved product quality helps boost sales - Dov Charney
15 Mar '12
5 min read
• Adjusted EBITDA increased by $24.1 million to $14.5 million from a previous year loss of $9.6 million.
• Net loss per share was $0.42 in 2011 vs. $1.21 in 2010.
Dov Charney, Chairman and CEO of American Apparel, commented, "We are pleased with our overall financial performance and significant operating improvements in 2011. This was an important transitional year for American Apparel, one in which we achieved the following significant accomplishments:
• Sequential improvements in our quarterly sales that resulted in an overall increase in total net sales despite a drop in the average number of stores in our portfolio. Net sales have also been strong in the first two months this year and comparable sales thus far in March are tracking in the +10% range. We improved timely delivery of goods to our stores, we noticeably improved product quality and assortment and we began a process to improve in store presentation.
• We aggressively began marketing to our imprintable wholesale customers and saw positive results. We introduced a new catalog, increased our direct marketing efforts and improved our product offering. So far in 2012 we are continuing to experience growth in the 20%+ range.
• We drove improvements in our manufacturing costs. Our sewing costs are near historic lows and we have been consistently performing this way since the second quarter of 2011.
• We began a process to reduce overall inventory levels and reduced our unit inventories by 7% in 2011.
• We delivered improvements in our distribution capability and have begun a process to drive an additional $3 to $5 million in future annual distribution savings.
• We closed 29 stores most of which were either underperforming or that did not fit our profile on a go-forward basis. This substantially completed our store rationalization program.
• We improved financial controls, added key personnel in our finance and accounting group and expect to eliminate our remaining material control weakness in 2012.
• Despite liquidity constraints, we invested in key processes and systems that will contribute to future sales and earnings growth. We now have RFID installed in 100 stores and continue to integrate our financial systems on a worldwide platform.
With our refinancing in place our focus in 2012 is to continue to drive top line sales in all channels and achieve improved efficiency in operations. Our expectation is to deliver another year of solid improvement in EBITDA performance in 2012."
For 2012, the Company is initially projecting adjusted EBITDA to be in the range of $32 million to $40 million. The outlook assumes net sales between $552 million and $559 million and a gross profit rate between 54.5% and 55.8%. Raw material costs are estimated at current prices and foreign currency exchange rates are estimated to remain at current levels. Capital expenditures are estimated at $15.9 million for the year with a modest number of new store openings.
American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California.
• Net loss per share was $0.42 in 2011 vs. $1.21 in 2010.
Dov Charney, Chairman and CEO of American Apparel, commented, "We are pleased with our overall financial performance and significant operating improvements in 2011. This was an important transitional year for American Apparel, one in which we achieved the following significant accomplishments:
• Sequential improvements in our quarterly sales that resulted in an overall increase in total net sales despite a drop in the average number of stores in our portfolio. Net sales have also been strong in the first two months this year and comparable sales thus far in March are tracking in the +10% range. We improved timely delivery of goods to our stores, we noticeably improved product quality and assortment and we began a process to improve in store presentation.
• We aggressively began marketing to our imprintable wholesale customers and saw positive results. We introduced a new catalog, increased our direct marketing efforts and improved our product offering. So far in 2012 we are continuing to experience growth in the 20%+ range.
• We drove improvements in our manufacturing costs. Our sewing costs are near historic lows and we have been consistently performing this way since the second quarter of 2011.
• We began a process to reduce overall inventory levels and reduced our unit inventories by 7% in 2011.
• We delivered improvements in our distribution capability and have begun a process to drive an additional $3 to $5 million in future annual distribution savings.
• We closed 29 stores most of which were either underperforming or that did not fit our profile on a go-forward basis. This substantially completed our store rationalization program.
• We improved financial controls, added key personnel in our finance and accounting group and expect to eliminate our remaining material control weakness in 2012.
• Despite liquidity constraints, we invested in key processes and systems that will contribute to future sales and earnings growth. We now have RFID installed in 100 stores and continue to integrate our financial systems on a worldwide platform.
With our refinancing in place our focus in 2012 is to continue to drive top line sales in all channels and achieve improved efficiency in operations. Our expectation is to deliver another year of solid improvement in EBITDA performance in 2012."
For 2012, the Company is initially projecting adjusted EBITDA to be in the range of $32 million to $40 million. The outlook assumes net sales between $552 million and $559 million and a gross profit rate between 54.5% and 55.8%. Raw material costs are estimated at current prices and foreign currency exchange rates are estimated to remain at current levels. Capital expenditures are estimated at $15.9 million for the year with a modest number of new store openings.
American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California.
American Apparel Inc
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