American Apparel CEO Dov Charney is blaming a sudden reduction in sales growth on Hurricane Sandy — which he says closed 25 of his stores — and the widespread cancellation of Halloween in the Northeast that occurred in the storm's aftermath.
AA had been enjoying a remarkable renaissance this year after a couple of years in which the company's crushing debt load threatened to drive it into bankruptcy.
From July through September, comparable sales in stores were up between 14% and 27% on the year before.
Then came AA's Halloween frightmare:
Three percent! Yikes.That's at least 10 percentage points of comp sales growth wiped off the board.
Charney said in an SEC disclosure that it was all Sandy's fault:
"October has historically been one of our strongest months based on the significant uptick in sales we experience for Halloween,” said Dov Charney, Chief Executive Officer and Chairman of the Board of American Apparel, Inc. Like all other retailers, we were blindsided by Sandy, and with greater New York being our largest market, we estimate we lost in excess of $1.5 million in retail sales due to the storm.
It's certainly the case that AA over-indexes for stores in New York. There are at least seven in lower Manhattan's "dark zone," which lost power. But here's a map of all AA's United States stores. The red dots and pins are all AA locations:
And then there's the question of Halloween. Sure, Halloween fell on the Wednesday after the storm, but the midweek date forced Halloween forward into the weekend of Oct. 27 for many. (Your author attended costume parties on the Friday and Saturday before the hurricane, for instance.)
Regardless, after a run of excellent comps, AA's October still looks like an outlier. Let's hope Charney has something up his sleeve for Christmas.
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