American Apparel's Wholesale Net Sales Increase 17 Percent in Q1

American Apparel, a vertically integrated manufacturer, distributor, and retailer of branded fashion-basic apparel headquartered in Los Angeles, announced financial results for its first quarter ended March 31, 2012.

"We are pleased with our first quarter results and solid improvements across all of our businesses," said John Luttrell, chief financial officer of American Apparel. "Our wholesale and online channels both reported record sales for the quarter, and we are highly encouraged by the continued momentum in comparable sales from our retail stores, both domestic and international. Though the first quarter is historically our slowest quarter of the year, significant sales growth and the related leveraging of fixed costs helped us meaningfully reduce our EBITDA loss. We expect key initiatives in the areas of merchandise planning, supply chain, IT systems, and inventory control to drive further sales and expense improvements for the balance of the year. Accordingly, we reiterate our adjusted EBITDA guidance of $32 to $40 million for the full year 2012."

Comparing the first quarter 2012 to the corresponding period last year, net sales increased 14 percent to $132.7 million on a 16 percent increase in comparable store sales in the retail business, a 17 percent increase in net sales in the wholesale business and a 5 percent decrease in the average number of stores.

The following delineates the components of the increases for the quarterly period ended March 31, 2012 and March 31, 2011 as compared to the corresponding quarter of the prior year:

Comparable Store Sales
First Quarter 2012: 14%
First Quarter 2011: -8%

Comparable Online Sales
First Quarter 2012: 25%
First Quarter 2011: 27%

Comparable Store & Online
First Quarter 2012: 16%
First Quarter 2011: -5%

Wholesale Net Sales
First Quarter 2012: 17%
First Quarter 2011: -4%

Gross margin for the first quarter of 2012 was 52.8 percent versus 54.8 percent for the corresponding period last year. The decrease in gross margin was primarily driven by lower production volume that resulted in lower absorption of our fixed overhead costs, partially offset by lower yarn costs.