American Apparel's stock plunged 27 percent today after the company's long-delayed second quarter financial results revealed falling sales and dim prospects for improvement. Is bankruptcy on the horizon?
The company's press release this morning—preliminary results only, thanks in part to the recent resignation of their accountants—revealed that debt was up nearly $30 million in the past quarter, and same-store sales were down 16%. It spells DOOM, okay? Go, WSJ:
The casual-clothing manufacturer and retailer said it is in talks with lenders to amend its credit pacts, as it is at risk of falling out of compliance with its debt covenants by the end of next month. Based on first-half results and projections for the rest of 2010, it said it doesn't expect to have sufficient liquidity the next 12 months, raising doubts about its ability to continue as a going concern.