With reports of second-quarter losses ranging anywhere from $5 to $7 million, and lenders to pay back in the coming months, the future of American Apparel is looking grim.
Yesterday we reported on Dov Charneys' call for a change in design direction on the part of the company—going from preppy-inspired hipster to hipster-inspired preppy—yet the embattled CEO may not get the chance to execute that vision. In an article in WWD, the company delivered a rather scary prognosis, stating that it may not have "sufficient liquidity necessary to sustain operations for the next twelve months."
September 30th will be a pivotal day for Charney and Co., when a minimum amount on a covenant is scheduled due to lenders. Should American Apparel be unable to pay the specified amount back, then by default the company may be required to pay the full amount of the lien agreement.
In the meantime, any American Apparel fans in need of new t-shirts might want to head over to a store sometime soon...