California Apparel News

In preliminary results for its second quarter, American Apparel reported it reduced its net loss over last year even though revenues were relatively flat.

The Los Angeles apparel maker, which has been mired in controversy after asking founder Dov Charney to relinquish his chief executive post while a misconduct investigation is ongoing, said it would have to delay its official second-quarter earnings because there are five new board members on the seven-member board.

On Aug. 13, the company said that Laura A. Lee was the fifth new member on the board.

“Laura brings a deep understanding of the Internet space and digital launch initiatives, combined with a strong background in major brand building and key partnership development, to the American Apparel board,” said Colleen Brown, nominating and governance board chair.

Lee is currently the head of East Coast content partnerships for Google/YouTube, where she oversees more than 150 television, film, new media and original entertainment partnerships. Prior to joining Google, she was a vice president and head of business development and operations for MTV.

Meanwhile, the company on Aug. 12 reported that for the three months ending June 30, net loss was $15 million compared with a net loss of $38 million during the same period last year.

Revenues are expected to be flat at $162 million while gross margin is estimated to have narrowed slightly to 51 percent from 52 percent in the year-earlier quarter.

For the six-month period ending June 30, the company estimates its net loss will be about $21 million compared with $84 million a year earlier. Revenues for the first six months this year were an estimated $299 million, down 0.3 percent from last year’s $300 million.

A battle has been going on in the executive level of the company, founded by Charney in 1997. In June, Charney was asked to step down as the chief executive of the vertical operation and leave the board while the company conducted an investigation into alleged personal and corporate misconduct by Charney.

The company’s chief financial officer, John Luttrell, is acting as the interim chief executive officer.

In the wake of his ouster, Charney mounted a struggle to gain more control of the company’s stock. He worked out a deal with New York private-investment company Standard General, which invested $25 million in the company, which started out selling blank T-shirts nearly 20 years ago. Charney and Standard General now own nearly 44 percent of the publicly traded company.

During the investigation into alleged misconduct by Charney, which Charney denies, the company is paying him to be a consultant with no authority over employees.