Wasn’t American Apparel (AMEX:APP) supposed to disappear in 2011? The once-trendy retailer was on everyone’s list of failures — but somehow averted bankruptcy with a new round of financing. But with APP stock relegated to the AMEX and trading under $1 per share, it appears American Apparel has delayed the execution but still faces the same grim sentence in the near future.
At its peak, American Apparel boasted about 260 stores, and racked up almost $560 million in revenue in 2009. Unfortunately, APP has lost money for seven straight quarters. The company has a microcap market size of just $70 million as of this writing — but a crippling debt load. It faces $91 million in long-term debt, $149 in total debt and some $267 million in total liabilities. Those are not pleasant numbers for a microcap stock that hasn’t turned a profit in two years.
Same-store sales have flattened, which means the firm isn’t bleeding out any faster. But the status quo is ugly, and something needs to change in a hurry for this stock to survive.
To top it off: Founder and CEO Dov Charney has been repeatedly under fire from former employees who claim sexual harassment. This stock is a disaster on all fronts and might not survive the coming year.