STORES Magazine - August 2008 - (Page 46)

RED TO BL ACK When companies move from unprofitability one year to profitability the next, there is usually jubilation, if only among the shareholders. The celebratory ambience is missing at American Apparel, a company whose financial statements are rarely written in indelible ink. Five years ago, it was a clothes maker with just three stores; now American Apparel is pushing the 200-store mark with locations in 15 countries. As a seller of youth-oriented apparel, the company has an outlaw image and is best known for advertising that has been described as, among other things, “almost porn” and “soft core.” Sales, even comparable-store sales, regularly register jumps of 25 to 30 percent. The financial side of the business is something else COMPANY 2007 EARNINGS 2006 LOSS 59 entirely, especially since the 2005 death of CFO Mark Schlein. Interim CFOs, bookkeeping by committee and outsiders imposed by institutional investors have all had their turns. Mistakes were made and restatements of earnings followed. In a filing with the SEC when it was going public last November, the company admitted it had “identified certain material weaknesses in American Apparel’s internal control over financial reporting that will need to be remedied.” One of these was “inadequate expertise in the application of U.S. generally accepted accounting principles.” Becoming a public company was not accomplished via a routine initial public offering of common stock, but through a transaction known as a “blank check” IPO in which a special purpose acquisition company buys a private firm and immediately goes public. The company’s shares began trading on the American Stock Exchange in December; the price rose as high as $16.80 and bottomed out at $5.52, though it has bounced back a bit since then. Other companies on the Red to Black list have had more conventional transitions from red ink to black. NPC International, an operator of Pizza Hut franchises, also went public last year, while Einstein Noah has morphed from the New World Restaurant Group a couple of years ago intothe operator and franchisor of such quick-casual bagel restaurants as Einstein Bros., Noah’s New York and Manhattan Bagels. American Apparel A.C. Moore Arts & Crafts ValueVision Jo-Ann Stores Susser Holdings NPC International Einstein Noah Bagels Wet Seal Triarc Morton’s Winn-Dixie Landry’s Seafood Rubio’s Restaurants Retail Ventures All dollar figures in thousands $15,478 3,783 22,161 15,400 16,252 7,770 12,586 23,232 16,081 13,002 300,594 18,112 1,189 51,442 ($1,606) (406) (2,685) (1,900) (3,746) (2,740) (6,868) (12,838) (10,932) (13,600) (361,301) (21,770) (3,461) (150,913) 100 H12 STORES / AUGUST 2008 first time this year. Spar- SIZZLING SEGMENT tan Stores has shed its 17.2% drug store chain and Supermarkets A&P 19.2 also distributes to some SUPERVALU 17.8 independent grocers. Whole Foods Markets 17.6 Rounding out the hot Spartan Stores 12.3 grocery segment are In- Ingles Markets 9.2 gles, a low-profile but well-respected operation based in western North Carolina, and Whole Foods Markets, which is still opening stores. Apparel stores are well represented among the Hot 100 Retailers, with the ’tweens and teens category enjoying an aggregate 13.3 percent sales lift. Included in this group are chains that have grown through rapid store openings rather than acquisitions, operations as disparate as Zumiez, Urban Outfitters, Aéropostale, The Buckle, and oneWWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - August 2008

STORES Magazine - August 2008 Contents Executive Editor's Page President's Page The Lure of Free Shipping Walmart’s New Look What Shoppers Think Will Widgets Work for Wheat Bread and Wasabi? 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Store Design Industry Economics Hot 100 Retailers Concept2Watch Mobile Technology Small Store Technology Website Optimization Site Selection Mobile Payments Recycling Merchandising: Cool Sells Merchandising: Merchandising in Mexico Store Construction & Development Human Resources Loyalty Programs Mobile Marketing Loeb Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - August 2008

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