Clothing and accessories retailer American Apparel has tapped restructuring advisers after being bogged down by weakening sales and heavy debt, the Wall Street Journal reported, citing people familiar with the matter.
The company recently enlisted lawyers at Skadden, Arps, Slate Meagher & Flom to work on restructuring options, though it is unclear what the strategy will be, the paper said.
The company, known for its racy advertising and bright “Made-In-America” clothes, reported that January same-store sales fell 5 percent while total sales fell 1 percent due to a colder-than-usual weather in the US.
The Los-Angeles-based company has about $240 million in debt and has come close to breaching loan covenants, debt terms designed to protect its lenders, in recent quarters, the Journal reported. Shares were down 32 percent, to close at 66 cents Thursday.