Hipster clothing chain American Apparel Inc. said Wednesday that its preliminary first-quarter operating loss widened and that it could soon be out of compliance with certain loans and default on its debt.
Its shares sank to a 15-month low.
The company did not disclose a net loss or a per-share figure, but said its loss from operations amounted to $17.6 million for the three-month period that ended on March 31. That's far worse than last year's operating loss of $3.9 million.
Net revenue climbed 6.6 percent to $121.8 million, up from $114.3 million during the same period last year.
The Los Angeles clothing maker said it would formally report its first-quarter figures when it submitted an SEC filing detailing the numbers sometime before the end of June.
Also Wednesday, American Apparel said that by late June it may default on a credit agreement because it will likely be unable to meet a debt-to-earnings ratio required under the terms of the loan.
It's working with a lender to amend the agreement, but cautioned that without a reprieve, there may be a damaging financial chain reaction that could force the company to pay both credit facilities immediately -- and in full.
"There can be no assurance that if either or both of these events were to take place, that the company would be able to obtain the additional sources of liquidity required to continue operations," American Apparel said in a statement.
American Apparel ended its first quarter with $91.4 million in debt, a nearly 11 percent increase from the $83.4 million in debt it had at the end of 2009.
American Apparel has $36 million and $4 million in cash available under its U.S. and Canadian revolving credit facilities.
Additionally, the retailer said it may be delisted from the Amex for failing to file its quarterly results with regulators on time. The company is working on regaining compliance with continued listing requirements and said it plans to submit its quarterly report as soon as practicable.
American Apparel shares fell as low as $1.95 in trading Wednesday, to a level not seen since March 2009.
By midday, shares were down 66 cents, or 24.1 percent, to $2.08.