Casual clothing chain American Apparel, suffering a steep sales slump and manufacturing problems, warned Tuesday that it may also default on loans and may not be able to stay in business.
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The Los Angeles-based clothing maker, which in Illinois has locations in Chicago, Evanston, Oak Brook and Schaumburg, said it may default on loan agreements with its lenders, cited ongoing weakness in its business.
If that happens, the company said it may not have sufficient liquidity to stay in business for the next 12 months.
The news pushed American Apparel shares down more than 17 percent in morning trading.
The company, which operates 279 stores in 20 countries, said it expects same-store sales, or sales at its stores open at least a year, to tumble 16 percent in its second quarter. The company expects to post a loss from operations of between $5 million to $7 million in the quarter.
It also warned that losses from operations would continue into its third quarter.
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SOURCE: Chicago Breaking Business
