American Apparel loss widens in second quarter

Los Angeles clothier American Apparel Inc. on Tuesday reported a higher loss in the second quarter despite a bump in sales.

For the quarter ended June 30, the retailer reported a net loss of $15.3 million, or 14 cents a share, compared with a loss of $213,000, or flat earnings per share, in the same period a year earlier.

Sales totaled $149.5 million, a 13% jump from $132.8 million in the year-ago period.

Peter Schey, an attorney for American Apparel, said the bigger loss was mostly attributable to stock warrants, which give investors the right to buy shares at a set price even if the stock soars in value. As its share price rose in the last quarter, the retailer had to take a charge to account for the increased liability, he said.

“Basically, if you have the potential that you have to sell stock at a certain price on a certain date, you have to carry a liability,” Schey said. “It’s like if you have major litigation, you set aside a certain amount for what you think the liability is.”

The company said its wholesale business rose 10%. Same-store sales, an important measure of sales because it compares stores open at least a year, were up 14%.

Schey cited the sales increases as a sign that the company’s performance is steadily improving.

“Things are turning around for the better,” he said. “It’s great for Los Angeles and great for Los Angeles workers.”

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