American Apparel’s quarterly profits jumped 83 percent on higher-margin sales, but the racy clothing retailer isn’t winning any investor converts.
Shares in the company, which is plagued by a lackluster economy and sloppy operations, sank 4.6 percent, or 12 cents, to $2.49.
The debt-ridden chain, whose CEO Dov Charney has raised eyebrows with his libertine lifestyle, said sales at its retail stores boosted third-quarter earnings to $4.2 million, or 5 cents a share, from $2.3 million, or 3 cents a share, a year ago.
American Apparel’s wholesale business, however, remains mired in a slump due to sluggish consumer spending. Executives admitted they have plenty of room to improve managing inventory, which was bloated at the end of the quarter.
Total sales slid 3 percent to $150.3 million.
On a conference call with analysts, Charney — who despite years of high-profile lobbying for immigration causes was forced this summer to fire 1,800 undocumented workers at his Los Angeles factory — said he’s cutting both inventory and debt.
“While it is still very early, we are encouraged by some indications pointing to the beginning of momentum in our sales,” Charney said.