Things Aren’t Looking Up for American Apparel

Things Aren’t Looking Up for American Apparel

Following the release of its 2015 second quarter financial results, troubled clothing retailer American Apparel may be closing its shutters for good.

Northfoto / Shutterstock.com

Northfoto / Shutterstock.com

Based on American Apparel‘s latest financial report, its sales has been spiraling downwards, falling 17.2% to US$134.4 million over the second quarter of 2015.

The company does not expect business to improve by much, stating in the report that “we believe we may not have sufficient liquidity necessary to sustain operations for the next twelve months”.

According to Fortune, American Apparel “tripped a debt covenant” with a key leader, Capital One, and is looking for ways to keep itself afloat.

But American Apparel will have to work something out real soon. The next scheduled interest payment on its debt is on October 15th and in the amount of US$13.9 million, more than what the company has on hand and more than its current borrowing capacity.

Eric Broder Van Dyke / Shutterstock.com

Eric Broder Van Dyke / Shutterstock.com

Also caught in a bad situation is fellow clothing retailer Gap. This June, the company had to close 175 stores in North America and cut 250 jobs at its headquarters.

While Gap may not be in dire straits compared to American Apparel, both companies will be hoping for profit-making strategies or a buyout, like what happened to Karmaloop, in order to turn things around.

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