Is Charney Bad For American Apparel's Stock Price?

Since American Apparel went public in December 2007, its stock price, with the exceptions of some minor upticks (like May and September of this year, when positive sales reports came out), has been steadily declining.

The company announced on Tuesday, Nov. 11, that its profit fell by 61%, mostly due to spending “13.2 million in stock-based compensation.” AA’s stock price dipped steeply at the news.

However, analyst Todd Slater of Lazard Capital Markets, thought the news was great, as reported by the Associated Press:

Lazard Capital Markets analyst Todd Slater, who rates the company “Buy,” said results were “great” and raised his 2008 and 2009 earnings estimates.

“We see American Apparel as one of the top-growth retail brands,” Slater wrote in a note to investors on Tuesday. “It is gaining in global cachet, with the potential to quadruple its base to 800 stores.”

In addition to the reaction in the markets when financial reports come out, the dips in the stock price seem to also be reacting to news reports about American Apparel CEO Dov Charney–both good and bad. For example, when this story from the Times came out about Charney’s immigration stance, the stock price seemed to bounce up over the next week or so. The market also seems to react poorly to reports about Charney’s copious and varied lawsuits. For example, the stock price fell again recently when new reports came out about the ex-employee suing Charney over wrongful termination when he refused to cook the books.

The share price is now down about 62% from its initial public offering. It closed on Friday at $3.94.

For your viewing pleasure, here are some fun facts about American Apparel, presented in an oh-so-fitting way:
YouTube Preview Image

This entry was posted in Uncategorized and tagged , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *