American Apparel 3Q earns up on high-margin sales

LOS ANGELES

Clothing retailer American Apparel Inc. said Tuesday its profit grew 78 percent in the third quarter because of a shift toward sales of higher-margin retail merchandise.

Profit was $4.2 million, or 5 cents per share, compared with $2.3 million, or 3 cents per share, in the same quarter a year ago.

Revenue declined 3 percent to $150.3 million from $154.8 million.

Operating expenses rose because of higher payroll and rent expenses, given more retail stores in operation.

Gross margin for the quarter was 58.1 percent, up from 49.1 percent a year earlier, partly because of a favorable shift in mix toward greater retail sales. Wholesale sales declined to 26.7 percent from 30.4 percent of total revenue a year ago.

Retail sales rose nearly 4 percent to $101 million, while sales from the lower-margin wholesale business declined nearly 15 percent to $40.2 million.

The company opened four new stores during the quarter.

For 2009, the company expects results to range from a loss of $1 million to profit of $4 million, with sales between $540 million and $555 million.