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American Apparel Inc (NYSEMKT:APP): Bounce Back To Business

Boston, MA 04/28/2014 (wallstreetpr) – NYSE MKT LLC has issued a letter to American Apparel Inc (NYSEMKT:APP) on April 15, 2014 indicating that the Company resolved the listing deficiency. On February 28, 2014, the Exchange identified the retailer is not following the compliance of listing standard. The letter becomes a big relieve for the Company to retain investor’s confidence. The news has a positive impact over the share price, up by 51%, and last closed at $0.71.

Worrying factors

In 2013, the implementation of new distribution centers already had a negative impact over its overall performance. Net sales were down due to disrupted flow merchandise to its stores, wholesale customers and through online and increased distribution costs further compress the profitability of the retailer. In addition, listing deficiency by the Exchange became another setback for the retailer.

Highly competitive apparel industry

The retailer continues to report lower sales across stores due to radical shifts in fashion, consumer demand and competition over pricing and availability. Therefore, customer preferences are shifting towards online operations and low priced fashionable products. So, e-commerce operations become a competitive factor that drives the demand in the apparel industry. As a result, online channel will continue to report positive sales over comparable stores in coming periods. In addition, wholesale business is more competitive with respect to price, quality and availability across its distribution network.

APP’s outlook

American Apparel Inc (NYSEMKT:APP)’s wholesale business continues to deliver solid growth despite high competition and the increasing demand over e-commerce operations will provide a positive trend for the retailer’s service through online channels. Considering the accelerated growth over online channels and wholesale business in last three months, APP expects a 4% year over year increase in net sales to reach in between $634 -$658 million in 2014. The Company also expects limited variation in raw materials costs and expects an increase in adjusted EBITDA of $40-$50 million.

Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing.

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