American Apparel in Money Trouble

May 20, 2010 • Fashion


American Apparel could be in serious trouble. 

The clothing retailer admitted yesterday that it expects to breach an $80 million loan from British investment firm Lion Capital. The firm practically saved the business from bankruptcy with the loan.

Last fall, sources say that American Apparel CEO Dov Charney had to be put on a tight leash after the company had to fire 1,500 undocumented workers at its Los Angeles factory as well as the company's spending of its executives, in which they traveled worldwide to pricey hotels.“I guess the idea was that these girls were sort of Dov’s eyes and ears, to find out what was going on at stores around the world,” according to a former company executive. “But it wasn’t always clear these girls were visiting the stores.”

American Apparel had delayed giving their 2010 financial outlook from March until May, citing that its reason was "highly uncertain sales trends". Of course, this was bad news bears once the news hit stock investors. Shares dropped 41 percent, to a 52-week low of $1.63 a share.

-Taneisha Jordan



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