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American Apparel, Inc. Message Board

  • stocktothemoon stocktothemoon Feb 7, 2013 10:18 AM Flag

    Same store sales does not automatically = profits

    You can put items on sale until the fat lady sings and that will make sales go up. What matters is did profits go up. Sales sales sales puts a little make up on but when the make up comes off what do you see. Are the profits up? These old tricks never seem to go away.

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    • American Apparel is slowly, I repeat, slowly showing some improvement here. I would not rule them out over the remainder of this year.

      Sentiment: Strong Buy

    • While what you are saying is true I am left wondering if you own any APP. I currently am holding 60K shares averaged in at .97. What is your position if you care to disclose.

      • 2 Replies to bigottimista
      • stocktothemoon, Do you have a position either long or short? Your points are well taken but it would be nice if you would disclose.

      • As we were discussing back below .90 in November ,as long as the sss increase for the first 2 months of the year the fourth quarter numbers should cause the stock to spike.

        If the fourth quarter numbers are just similar to the third (in percentage terms, not sales) the company will have an operating profit of between 4 and 6 million.The interest expenses will push the number to 4 to 6 million dollar loss, but the big difference will be the unrealized gain or loss of the fair value of warrants and purchase rights.

        In the third quarter the reason the loss was so large, 19 million, was that there was a 13.3 million dollar gain in the value of the warrants during the quarter as the stock moved from a .90 to 1.50 during the quarter that was being reported. This added 13.3 million to the loss, after the loss was reported the stock retreated and ended up at 1.01 on December 31.

        This means that instead of a 13.3 million dollar increase in the value of the warrants adding to a quarterly loss, a 12 million or so drop in the value of the warrants should push the quarterly profit over 5 million for the fourth quarter.The stock will probably get a nice little bump, the same way it took the hit even though it has nothing to do with the operations of the company.

        The interesting thing is that the numbers could swing the other way when the first quarter numbers get reported. Since the first quarter is the slowest quarter of the year an 11% increase in sales for the full quarter will leave the company with a quarterly loss with the interest expenses and the rise of the stock price will make the value of the warrants higher adding to the loss in the first quarters numbers.

        The company should not show a real profit until the second quarter and that will only happen if they continue the strong sales growth they are showing.

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