prunes Posted April 13, 2011 Share Posted April 13, 2011 American Apparel (APP) is a vertically integrated manufacturer, wholesaler, and retailer of simple, stylish clothing. APP's stock price is trading near its 52-week low at $0.77, down from $3.62 in May. Back in 2008, the stock was trading as high as $15. APP has been hurt by its inability to get its SG&A expense under control. Financial performance has been unabashedly poor, and APP hasn't turned a profit since 2009. Further, APP has experienced ballooning inventories and has a large amount of short-term debt. The silver lining in all of this, however, have been the actions of APP's infamous (and scandalous) CEO, Dov Charney. Dov has purchased 6.8 MM shares in the last six months. These shares were purchased before the stock fell to below $1. Say what you will about Dov's morals (google his name + sexual harassment if you are unfamiliar with the man), but he is not stupid. Dov built APP from scratch, and he is too smart to throw good money after bad. His purchases clearly are providing no comfort to investors. I think it is more likely that he senses that the situation here is recoverable. Even if APP can't rightsize it's financial performance, the company has a very strong brand, and is very cheap. Both of these factors should help to make it attractive for a potential buyout. Most recent discussion of American Apparel was here: http://cornerofberkshireandfairfax.ca/forum/index.php?topic=2755.0 Link to comment Share on other sites More sharing options...
Ravi Posted April 14, 2011 Share Posted April 14, 2011 Will it make more sense to buy the debt. How much is the debt trading for? Link to comment Share on other sites More sharing options...
prunes Posted April 19, 2011 Author Share Posted April 19, 2011 APP rallied 8% today and is up 30% since I started this thread. Today it was up on news that it looks to secure $10 MM in rescue financing to avert BK. Link to comment Share on other sites More sharing options...
Myth465 Posted April 19, 2011 Share Posted April 19, 2011 Congrats, I need to start looking at hairier situations. Link to comment Share on other sites More sharing options...
prunes Posted April 19, 2011 Author Share Posted April 19, 2011 Thanks but unfortunately I didn't buy any. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted April 19, 2011 Share Posted April 19, 2011 Prunes, do you see a positive result for long-term shareholders, or are you treating this as a trading stock? They have impending debt maturities with cross-default provisions set against operations with increasing operating expenses, excluding non-cash charges, and declining same-store sales. Any dilutive recapitalization is going to include an adjustment to Lion Capital's convert ratio (and so the dilution will have to include that cost). It looks like a gamble, unless I'm missing something major, like a natural buyer. Link to comment Share on other sites More sharing options...
prunes Posted April 19, 2011 Author Share Posted April 19, 2011 No I don't necessarily think APP is a good investment. I think Dov Charney's purchases make the company worth investigating, and I started this thread to generate discussion and see whether anyone else understands the situation better than I do. I think there is too much risk of bankruptcy, honestly, to hold the stock for any significant amount of time. Link to comment Share on other sites More sharing options...
Liberty Posted April 23, 2011 Share Posted April 23, 2011 http://www.theglobeandmail.com/report-on-business/canadian-investors-rescue-american-apparel/article1996130/ Link to comment Share on other sites More sharing options...
PlanMaestro Posted February 2, 2013 Share Posted February 2, 2013 I liked this interview. The guy may be crazy but he is not completely stupid. http://video.cnbc.com/gallery/?video=3000083430&play=1 Link to comment Share on other sites More sharing options...
Capitalist World Posted February 5, 2013 Share Posted February 5, 2013 I am watching this one too but the industry is too hard and Dov is too wild for my taste (but very interesting). Rohit Seghal at Dynamic owns a big chunk (not sure if that's a good thing LOL). I asked a few teenage girls to check out the Toronto store and the imediate reaction was " its finished and stale and uncool" based on 12 month ago visit BUT one hour later I got a call back and they had just come back from the store and they loved it again... the catalyst will be refinancing the debt at a cheaper rate and continued expansion and SSS. One to watch and maybe 1-2% of capital but no more Link to comment Share on other sites More sharing options...
ShahKhezri Posted February 5, 2013 Share Posted February 5, 2013 I'd just like to say, don't open up the company's site at work. Link to comment Share on other sites More sharing options...
Olmsted Posted February 5, 2013 Share Posted February 5, 2013 I've been watching this one ever since that SPAC took it public. Was living in LA at the time, the epicenter of APP, so I heard plenty about the company, its practices, and its crazy CEO. Good interview. The guy is definitely nuts, but there is definitely at least a bit of genius poking through. The CEO kept me from ever looking too closely at this - the amateurishness with which the company was run was very striking back in ~2008. To some extent that is characteristic of normal growing pains for a fashion company with a founder management team that is now a much larger public company. You could see the same pattern at True Religion for example (to a much lesser extent). But things may have changed at APP. The equity infusions have brought serious investors who are more likely to exert a degree of adult supervision here. Dov talks about the people they are hiring now - the management team they are building 'around him.' I think this is indicative of a more mature attitude. Some smart guys on twitter are starting to talk about a refi catalyst here. Link to comment Share on other sites More sharing options...
jrallen81 Posted February 5, 2013 Share Posted February 5, 2013 Hey Olmstead, I'm interested in following it a little more on twitter. do you mind sharing a couple of names to follow with me? thanks, jrallen81 Link to comment Share on other sites More sharing options...
Olmsted Posted February 5, 2013 Share Posted February 5, 2013 Well I follow a bunch of people from this forum and some others. Instead of me writing them all out, just look me up @Olmsted2 and see who's on my follow list. Probably the easiest for all! Link to comment Share on other sites More sharing options...
jrallen81 Posted February 5, 2013 Share Posted February 5, 2013 twitter noob, didn't know you could do that! thanks! Link to comment Share on other sites More sharing options...
augustabound Posted February 6, 2013 Share Posted February 6, 2013 I follow Michael Bigger on Twitter and he's in on APP and written it up a few times on his blog. The catalyst for him are the warrants for Dov relating to the share price targets in 2014 and 2015. Up to ~$5.25 IIRC. Link to comment Share on other sites More sharing options...
PlanMaestro Posted February 6, 2013 Share Posted February 6, 2013 I follow Michael Bigger on Twitter and he's in on APP and written it up a few times on his blog. The catalyst for him are the warrants for Dov relating to the share price targets in 2014 and 2015. Up to ~$5.25 IIRC. Interesting write-ups … time to follow the guy. On April 2012, the Board awarded 7,500,000 shares to Dov Charney, CEO of the company, vesting over the next three years as long as the company meets or exceeds the following annual EBITDA targets (one third of the award vesting annually): 2012: If EBITDA is greater than $32,253,000 he gets 2.5mm shares 2013: If EBITDA is greater than $53,251,000 he gets 2.5mm shares 2014: If EBITDA is greater than $68,212,000 he gets 2.5mm shares Charney also owns 22.5mm warrants struck at increasing levels starting with the first struck at $3.50 maturing in March of 2014. There is a big incentive for the CEO to do everything in his power to achieve the EBITDA targets and to move the stock to above $3.50. Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 6, 2013 Share Posted March 6, 2013 Back in the debt market. http://boardvote.com/symbol/APP/communique/248631 Link to comment Share on other sites More sharing options...
Olmsted Posted March 6, 2013 Share Posted March 6, 2013 Huge. Refi of that high-interest debt is catalyst #1. Driving SSS growth to use up that excess manufacturing capacity is #2. Link to comment Share on other sites More sharing options...
Capitalist World Posted March 7, 2013 Share Posted March 7, 2013 Great to see the refi and the SSS looks good too . Need more details on Interest rate/terms. but its looking much better. Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 7, 2013 Share Posted March 7, 2013 American Apparel reports Feb comparable sales increased 6%, including 3% increase in retail store channel comps and a 28% increase in net sales for its online channel (APP) 1.88 : "February represents our 21st consecutive month of positive comparable store growth," said Dov Charney, Chairman and Chief Executive of American Apparel, Inc. "This solid performance is consistent with our business plan as reflected in our guidance issued earlier this week indicating net sales between $652 million and $660 million and Adjusted EBITDA between $47 million and $54 million for 2013." Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 10, 2013 Share Posted March 10, 2013 Inditex spinning gold. Video: http://nyti.ms/YZotVA Article: http://www.nytimes.com/2012/11/11/magazine/how-zara-grew-into-the-worlds-largest-fashion-retailer.html?pagewanted=all Link to comment Share on other sites More sharing options...
PlanMaestro Posted March 14, 2013 Share Posted March 14, 2013 Fast Fashion's Challenge: Making Money With 'Made In The USA' http://www.npr.org/2013/03/13/174199449/fast-fashions-challenge-making-money-with-made-in-the-usa In Trendy World Of Fast Fashion, Styles Aren't Made To Last (Forever 21, H&M) http://www.npr.org/2013/03/11/174013774/in-trendy-world-of-fast-fashion-styles-arent-made-to-last The Reclusive Spanish Billionaire Behind Zara's Fast Fashion Empire http://www.npr.org/2013/03/12/173461375/the-recluse-spanish-billionaire-behind-zaras-fast-fashion-empire Link to comment Share on other sites More sharing options...
Olmsted Posted March 14, 2013 Share Posted March 14, 2013 Fast Fashion's Challenge: Making Money With 'Made In The USA' http://www.npr.org/2013/03/13/174199449/fast-fashions-challenge-making-money-with-made-in-the-usa In Trendy World Of Fast Fashion, Styles Aren't Made To Last (Forever 21, H&M) http://www.npr.org/2013/03/11/174013774/in-trendy-world-of-fast-fashion-styles-arent-made-to-last The Reclusive Spanish Billionaire Behind Zara's Fast Fashion Empire http://www.npr.org/2013/03/12/173461375/the-recluse-spanish-billionaire-behind-zaras-fast-fashion-empire He has plans for made in the USA military uniforms, doctors' scrubs, hospital gowns. And he has a brand new $5 million warehouse and plans to fill it. But how? Military uniforms could be an interesting venture. I believe that by fiat they have to be made in USA. I imagine the companies that do so are not the paragon of cut-throat efficiency, given that they have a rock-solid moat (just guessing, no actual familiarity with any uniform manufacturers). Enter another company used to actually competing against overseas factories - they have to be way more efficient as a result and should be able to beat the pants off the current competition. Interesting opportunity. Link to comment Share on other sites More sharing options...
bookie71 Posted March 15, 2013 Share Posted March 15, 2013 I'm not sure about uniforms, but MacRae Industries has a fairly large military boot contract. (MRINA) They are selling at less than book. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now