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American Apparel to finish 2008 with 80 new store openings
20 Nov '08
5 min read
Operating income for the third quarter of 2008 was $6.8 million, after the impact of the $13.2 million stock based compensation expense, versus $11.7 million in the prior year third quarter Operating margin for the third quarter of 2008 was 4.4%, versus 11.0% in the quarter a year ago. The impact of the share based compensation expense reduced the third quarter 2008 operating margin by 850 basis points.
Interest expense for the third quarter of 2008 decreased to $3.2 million from $4.4 million in the third quarter of 2007. The decrease in interest expense was due to a decrease in the LIBOR rate on which the company's floating rate debt is based.
The company's effective tax rate in the third quarter declined to 26.9%, reflecting the benefit of federal and state enterprise zone tax credits related to the company's expanded hiring and manufacturing activity in the downtown Los Angeles area. The effective tax rate for the nine months ended September 30, 2008 was 33.5%.
Net income for the third quarter of 2008 was $2.3 million, or $0.03 per diluted share. Excluding the impact of the merger related stock compensation expense, net income would have been $11.1 million, or $0.16 per share. This compares to $6.0 million in net income, or $0.10 per share, for the third quarter of 2007.
The company continues to expect diluted earnings per share in the range of $0.32 to $0.36 for 2008, before giving effect to the stock based compensation expense resulting from the 2.71 million share employee stock grant pursuant to the merger agreement between Endeavor Acquisition Corp. and American Apparel, Inc. The company has approximately 800,000 shares remaining pursuant to the merger which it expects to grant in the fourth quarter of 2008 to eligible retail and administrative employees.
As of October 31, 2008, American Apparel had opened 55 new store locations since the beginning of the year and closed 3 locations. The company had 40 signed leases for retail stores in its pipeline, including stores in new markets such as Yokohama, Japan; Toulouse, France; and Adelaide, Australia. The company plans to have opened approximately 80 stores by the end of 2008, up from its previously stated guidance of 50 to 55 stores.
Dov Charney, Chairman and Chief Executive Officer, stated: "We are very pleased with our financial performance in the third quarter, and the momentum our business has had while we have expanded in so many new markets this year. While we are cognizant of the economic difficulties worldwide, particularly in retail, we remain cautiously optimistic that our products represent a unique value to consumers even in a weak economy."
"As we look at 2009, having already experienced so much growth in 2008, we plan to tailor our expansion plans accordingly with an eye on the overall economic environment and our goal to generate significant free cash next year."
Interest expense for the third quarter of 2008 decreased to $3.2 million from $4.4 million in the third quarter of 2007. The decrease in interest expense was due to a decrease in the LIBOR rate on which the company's floating rate debt is based.
The company's effective tax rate in the third quarter declined to 26.9%, reflecting the benefit of federal and state enterprise zone tax credits related to the company's expanded hiring and manufacturing activity in the downtown Los Angeles area. The effective tax rate for the nine months ended September 30, 2008 was 33.5%.
Net income for the third quarter of 2008 was $2.3 million, or $0.03 per diluted share. Excluding the impact of the merger related stock compensation expense, net income would have been $11.1 million, or $0.16 per share. This compares to $6.0 million in net income, or $0.10 per share, for the third quarter of 2007.
The company continues to expect diluted earnings per share in the range of $0.32 to $0.36 for 2008, before giving effect to the stock based compensation expense resulting from the 2.71 million share employee stock grant pursuant to the merger agreement between Endeavor Acquisition Corp. and American Apparel, Inc. The company has approximately 800,000 shares remaining pursuant to the merger which it expects to grant in the fourth quarter of 2008 to eligible retail and administrative employees.
As of October 31, 2008, American Apparel had opened 55 new store locations since the beginning of the year and closed 3 locations. The company had 40 signed leases for retail stores in its pipeline, including stores in new markets such as Yokohama, Japan; Toulouse, France; and Adelaide, Australia. The company plans to have opened approximately 80 stores by the end of 2008, up from its previously stated guidance of 50 to 55 stores.
Dov Charney, Chairman and Chief Executive Officer, stated: "We are very pleased with our financial performance in the third quarter, and the momentum our business has had while we have expanded in so many new markets this year. While we are cognizant of the economic difficulties worldwide, particularly in retail, we remain cautiously optimistic that our products represent a unique value to consumers even in a weak economy."
"As we look at 2009, having already experienced so much growth in 2008, we plan to tailor our expansion plans accordingly with an eye on the overall economic environment and our goal to generate significant free cash next year."
American Apparel Inc
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