American Apparel (APP) Prelim. FY13 Comps Rose 3%
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American Apparel (AMEX: APP) provided information with respect to the following:
-- Preliminary 2013 Financial Results (Unaudited)
-- 2014 Sales and EBITDA Guidance
-- Preliminary Sales Results for February 2014
-- Receipt of Noncompliance Notice from NYSE MKT
Preliminary 2013 Financial Results
Preliminary unaudited financial results for 2013 are as follows:
Sales:
-- Net sales of $634 million, an increase of 3%.
-- Comparable store sales including online sales, an increase of 3%.
-- Wholesale net sales of $180.7 million, an increase of 4%.
2014 Sales and EBITDA Guidance
For 2014, we are projecting net sales between $634 million and $658 million based upon a flat to 4% overall increase in net sales.
Adjusted EBITDA is estimated in the range of $40 million to $50 million. Capital expenditures are estimated at $12 million with a marginal number of new store openings. Raw material costs are estimated at current prices and foreign currency exchange rates are estimated to remain at current levels.
According to Dov Charney, Chairman and CEO of American Apparel, Inc., “The challenged implementation of our new distribution center had a material negative impact on the Company in terms of actual costs as shown in the above table (estimated at $14.9 million). Naturally, the disrupted flow of merchandise to our stores, wholesale clients, and online customers had an immediate negative impact on sales. These disruptions impaired our ability to react to demand trends and properly plan production flows and resulted in production cost overruns and excessive overtime charges. However, the La Mirada Center has been operating as designed since mid-November. Our distribution costs have dramatically declined and in January they were substantially less than what we incurred last year. Although we expect to make further cost improvements, the vast majority of the needed cost reductions have already been implemented. We expect that 2014 sales and costs will be enhanced by the operation of the La Mirada facility. Although this was a painful and costly endeavor it was necessary in order for us to achieve the future productivity and growth potential associated with the American Apparel brand.
“Additionally in late 2013 and into January 2014, we implemented an aggressive program to reduce overhead costs. To date we have eliminated in excess of $9 million in such annual operating expenses. We expect that almost the entire amount of the overhead savings will be realized in 2014. These cost reductions primarily impact the Company’s manufacturing and administrative functions. We also closed another warehouse facility in December bringing the total warehouse closures in 2013 to three. Although 2013 results were burdened with the costs of the closures we will receive a meaningful financial benefit from these closures in 2014 and beyond. We continue to work to further reduce overhead costs.
“We invested substantially in our infrastructure in 2012 and 2013 and almost all of these projects have been implemented. We expect 2014 to be a year where we return our full focus to exploiting the strength of our brand and delivering exceptional service to our retail and wholesale customers. We are committed to delivering a return on the investments we have made in our business.”
American Apparel Receives Noncompliance Notice from NYSE MKT
On February 28, 2014, American Apparel received a letter from the NYSE MKT LLC (the “Exchange”) stating that the Company is not in compliance with the continued listing standards of the Exchange set forth in Section 1003(a)(iv) (financial impairment) of the NYSE MKT LLC Company Guide (the “Company Guide”). In order to maintain its listing, the Company must submit a plan of compliance by March 21, 2014 addressing how it intends to regain compliance with Section 1003(a)(iv) of the Company Guide by April 15, 2014. If the plan is accepted, the Company may be able to continue its listing but will be subject to periodic review by the Exchange. If the plan is not accepted but the Company is not in compliance with the continued listing standards by April 15, 2014, or if the Company does not make progress consistent with the plan, the Exchange will initiate delisting procedures as appropriate.
The Exchange's notice has no immediate effect on the listing of the Company's common stock on the Exchange. The Company's management is pursuing options to address the Company's financial requirements and intends to submit such a plan on or before the deadline set by the Exchange.
-- Preliminary 2013 Financial Results (Unaudited)
-- 2014 Sales and EBITDA Guidance
-- Preliminary Sales Results for February 2014
-- Receipt of Noncompliance Notice from NYSE MKT
Preliminary 2013 Financial Results
Preliminary unaudited financial results for 2013 are as follows:
Sales:
-- Net sales of $634 million, an increase of 3%.
-- Comparable store sales including online sales, an increase of 3%.
-- Wholesale net sales of $180.7 million, an increase of 4%.
2014 Sales and EBITDA Guidance
For 2014, we are projecting net sales between $634 million and $658 million based upon a flat to 4% overall increase in net sales.
Adjusted EBITDA is estimated in the range of $40 million to $50 million. Capital expenditures are estimated at $12 million with a marginal number of new store openings. Raw material costs are estimated at current prices and foreign currency exchange rates are estimated to remain at current levels.
According to Dov Charney, Chairman and CEO of American Apparel, Inc., “The challenged implementation of our new distribution center had a material negative impact on the Company in terms of actual costs as shown in the above table (estimated at $14.9 million). Naturally, the disrupted flow of merchandise to our stores, wholesale clients, and online customers had an immediate negative impact on sales. These disruptions impaired our ability to react to demand trends and properly plan production flows and resulted in production cost overruns and excessive overtime charges. However, the La Mirada Center has been operating as designed since mid-November. Our distribution costs have dramatically declined and in January they were substantially less than what we incurred last year. Although we expect to make further cost improvements, the vast majority of the needed cost reductions have already been implemented. We expect that 2014 sales and costs will be enhanced by the operation of the La Mirada facility. Although this was a painful and costly endeavor it was necessary in order for us to achieve the future productivity and growth potential associated with the American Apparel brand.
“Additionally in late 2013 and into January 2014, we implemented an aggressive program to reduce overhead costs. To date we have eliminated in excess of $9 million in such annual operating expenses. We expect that almost the entire amount of the overhead savings will be realized in 2014. These cost reductions primarily impact the Company’s manufacturing and administrative functions. We also closed another warehouse facility in December bringing the total warehouse closures in 2013 to three. Although 2013 results were burdened with the costs of the closures we will receive a meaningful financial benefit from these closures in 2014 and beyond. We continue to work to further reduce overhead costs.
“We invested substantially in our infrastructure in 2012 and 2013 and almost all of these projects have been implemented. We expect 2014 to be a year where we return our full focus to exploiting the strength of our brand and delivering exceptional service to our retail and wholesale customers. We are committed to delivering a return on the investments we have made in our business.”
American Apparel Receives Noncompliance Notice from NYSE MKT
On February 28, 2014, American Apparel received a letter from the NYSE MKT LLC (the “Exchange”) stating that the Company is not in compliance with the continued listing standards of the Exchange set forth in Section 1003(a)(iv) (financial impairment) of the NYSE MKT LLC Company Guide (the “Company Guide”). In order to maintain its listing, the Company must submit a plan of compliance by March 21, 2014 addressing how it intends to regain compliance with Section 1003(a)(iv) of the Company Guide by April 15, 2014. If the plan is accepted, the Company may be able to continue its listing but will be subject to periodic review by the Exchange. If the plan is not accepted but the Company is not in compliance with the continued listing standards by April 15, 2014, or if the Company does not make progress consistent with the plan, the Exchange will initiate delisting procedures as appropriate.
The Exchange's notice has no immediate effect on the listing of the Company's common stock on the Exchange. The Company's management is pursuing options to address the Company's financial requirements and intends to submit such a plan on or before the deadline set by the Exchange.
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