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American Apparel lowers outlook after muted second quarter

American Apparel has lowered its outlook for the year after muted EBITDA growth in the second quarter, while clocking up further losses as it paid off debts.

The US fashion chain saw sales grow 9% to $162.2m (£104.8m). Comparable store sales were up by 7% while wholesale sales were also up 16%.

EBITDA rose by just $300,000 (£193,000) to $7.9m (£5.1m), as a result of supply chain tweaks and charges associated with distribution.  Net losses for the second quarter of 2013 stood at $37.5m (£24.25m), compared to $15.3 m (£9.9m) for the same period last year, due to the “extinguishment of debt.”

Gross margins decreased from 52.9% to 51.7% due to stronger growth in wholesale business.

The company is now expecting to post full year EBITDA between $46m (£29.7m) and $51m (£32.9m), with net sales of between $652m (£421m) and $664m (£429m) forecast.This is decrease on previous guidance of EBITDA between $47m and $54m, and sales of between $652m to $660m.

Chief financial officer John Luttrell said: “We saw a healthy increase in sales across all three business channels, but our second quarter adjusted EBITDA performance was negatively affected by approximately $2.9m (£1.87m) of costs associated with the transition to a new distribution centre and other performance measures we took to improve our distribution operations.

“As a result, we have adjusted our outlook for the year to reflect these factors.”

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