American Apparel (AMEX:APP)
Fashion retailer of basic apparel for men, women, children, and pets, with locations in North America, Europe, Asia, and Australia.
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Bad fundamentals/small cap.
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Bankruptcy, here we come...
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turnaround story
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technicals are bad, retailer and looks like its sold out company and continue to fall
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For one simple reason, the CEO cannot control Debt.
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Bad media + crazy CEO - payouts to victims of sexual harassment = Red thumb.
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Takeover Target!!!
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Takeover target.
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Enormous purchases by CEO
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30,30,0
96,27,9
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This is my worst performing CAPS stock today yet I am sticking to it.
Both the stock and the company is hovering just above ground zero. Debt is killing operations. Its Made in LA brand and production is shaken by emigration issues. But they are adding more stores constantly. The American Apparel brand is strong and unique. The products they sell are cleverly designed for long shelf life and to match any taste and wardrobe. People appreciate their smart and practical approach to fashion. They produce the basic materials as well as the products. The CEO/Founder is on board and fighting it.
This company has very strong roots and core values to live another day. If they survive this year and maybe the next, we will be looking at a really nice turn around. Since I picked this for CAPS I have added to my portfolio twice as we visited $.75. I am in it for the long run, 10 years at least.
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They are definitely going to miss their filing deadline and get their share delisted.
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give it a go
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Nutso CEO, potential deb defaults, and not sure if there's any room left for expansion. Hipster has become cliche, yet AA is not evolving.
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Financial problems are a killer.
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5+ yrs pick, lol, if it hasn't gone bkrupt:
RL pick:
Their stores are pretty much already in every oecd country, how can growth come? last week they opened a store within selfridges in london (hello sales cannibalization from other app store down oxford street)..., but with an (accounting-favored) net profit margin of 0.9% (a symbolic NI of 1.1mn$) how are they gonna pay the rent? ...
and sales Q1 yoy have gone down... they say they had inventory issue because of lay offs, but just an excuse, their inventory as % of sales actually increased from 3.2% to 3.8%, because they can't sell the stuff....they sell more or less to same guys as ab&fitch (just a little more 'hip' due to image from LA) but their success is based on low prices and simple clothing -not good for shareh returns (and for paying off interest expenses) and consumer's rise out of recession...
But the reason for potential financial distress and equity dilution (brktcy if Private Equity owners are smart enough to not throw good money after bad), is they have to update manu plants, to push up margins because of their PE owner that saved APP from bkrtcy in march '09 (I guess they want to compete against eg ab&fitch because of their mouth-watering profit margins, but in doing so they will likely trash the brand) and because of illegal worker layoffs, therefore current depr&am is understated so that NI would be a loss, and if only understated by 20% it would push their FCF to 17£mn (ceteris paribus), below their annual interest expense of $22.6mn...AND they also have to boost CapEX, after dropping it by 40$mn (wow!) last year to pay off debt, those machines cost at least $20mn to upgrade, therefore they will have negative fcf, but can't raise more debt, so equity will go down even more (possibly becoming 'officially' negative given a write off of pp&e assets, since eq could already be -, but not in the numbers reported)
So too much debt because of an overly ambitious ceo that opened too many stores...
Finally, stock in downtrend within larger downtrend! some big boys are selling massive blocks of shares (look at volume), as they are getting out after outlook of failure and lack of gizz...
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These guys always have scandals. Thay always pull thru, they are green and all that other hip stuff. My generation will support them no matter what.
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