American Apparel’s fortunes are going from bad to worse.
Not only may the company run out of cash soon, American Apparel disclosed in a filing with the SEC yesterday that the U.S. Attorney General in the Southern District of New York has subpoenaed the company about the circumstances surrounding the resignation of accounting firm Deloitte & Touche.
Deloitte resigned July 22 after additional information came to light that may make Deloitte’s previous auditing reports and financial statements unreliable.
The Securities and Exchange Commission is also looking into what happened with Deloitte’s resignation.
And, the Equal Employment Opportunity Commission is in the midst of a broad, multi-year investigation of sexual harassment claims at the company.
American Apparel stock is down nearly 19% in trading this morning to 83 cents.
In attempt to reduce expenses quickly, the company is, according to documents filed with the SEC,
- “Moderating production at the Company’s manufacturing facilities to reduce inventory levels, and reduce raw material purchases and labor
- Streamlining of the company’s logistics operations
- Potentially subleasing certain of the company’s leased properties used in the Company’s manufacturing operations
- Merchandise price rationalization in the company’s wholesale and retail channels
- A strategic review of the company’s retail real estate portfolio, including potential lease renegotiations and store closures
- Improved merchandise allocation procedures
- A review of staffing levels at the company’s retail locations and the selective and targeted reduction in the company’s marketing spend.
- In addition, the Company continues to develop other initiatives intended to either increase sales, reduce costs or improve liquidity.”
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