Los Angeles-based hipster-uniform maker American Apparel announced Wednesday that it had a first-quarter loss of $17.6 million and, as such, it could end up afoul of certain loan terms and ultimately default of some of its debt.
The company, run by colorful and controversial founder Dov Charney, said sales at its stores were down 10 percent compared to last year. Net revenue climbed 6.6 percent. American Apparel, however, is $91 million in debt and could find it hard to carry on come June when it might violate a “debt-to-earnings ratio” requirement of one loan. The company is trying to renegotiate the terms.
Business Week reported that the downtown concern could be delisted from its stock exchange because it is failing to file its quarter results with federal officials on time.
The company has 280 retail stores and is largely responsible for those ubiquitous neon tights that have become part of the hipster uniform for many young women.
The clothing maker, which insists on making its goods downtown, has been a vocal proponent of workers' and immigrants' rights. (A t-shirt it makes declares, “Legalize L.A.”). MarketWatch reports that some of the company's financial troubles stem from being forced to let go of as many as 1,500 undocumented workers last year.