Unfortunately for Burkle, and all of American Apparel’s other shareholders, things went from bad to worse for the company during the second half of 2010. The share price plunged below $1.00 in late August and early September, as the company fell out of compliance with several of its biggest lenders, lost the confidence of its public accounting firm, which promptly quit, and struggled to report its financial information to investors in a timely manner. American Apparel’s failure to file its quarterly results on time drew the ire of the Securities and Exchange Commission and the New York Stock Exchange, which warned it of delisting but ultimately didn’t follow through, and the departure of the accounting firm earned the company subpoenas from the Department of Justice. So much for “undervalued.”
Late last year, American Apparel announced it expected it would not make a profit for 2010. Sales, especially sales at stores open for longer than twelve months, a measurement that controls for store openings, have been in decline since February of 2009. Two-thousand-nine. American Apparel’s same-store sales declined, during the third quarter of last year alone, by 16% year-on-year. Overall sales fell 10.5%.
Burkle announced in an SEC filing yesterday that he has reduced his stake in the company from 6% to around 4.3%. During the period in which he sold the shares, American Apparel’s share price ranged between $1.37 and $1.62, and averaged $1.50. Since Burkle’s sale became news, the stock is trading at around $1.09.
Why Burkle sold a big chunk — but not all — of his American Apparel holdings is of course unknown. Is he pissed that the company still isn’t performing better? Why make a move guaranteed to depress American Apparel’s stock price, given he still holds 4.3% of the company? Is he hedging? Does he just really love Dov Charney, the pants-optional C.E.O. whose sexay antics nearly match Burkle’s own? Burkle isn’t saying. Likewise, American Apparel spokeslawyer Peter Schey (our favorite person!) and company spokesperson Ryan Holiday couldn’t or wouldn’t comment on the move by our deadline today.
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Burkle Cuts Stake In Troubled American Apparel [Reuters]
Burkle Reduces American Apparel Stake [Los Angeles Business Journal]
American Apparel [Google Finance]
