American Apparel 2Q Profit Falls But Beats View

LOS ANGELES (AP) — Teen clothing retailer American Apparel Inc. said Thursday its second-quarter earnings plunged 34 percent, hurt by higher costs and weaker wholesale sales, but still edged out analysts' expectations.

Net income dropped to $4.5 million, or 6 cents per share, for the three months ended June 30. That compares with $6.8 million, or 10 cents per share, for the second quarter of 2008.

The company cited a 10 percent decline in sales at stores open at least a year, and the stronger dollar's negative effect on international sales. Operating expenses increased to 53.6 percent of sales from 46.9 percent a year earlier due to higher payroll, rent, occupancy and depreciation expenses as the number of retail stores climbed to 272 from 195 a year earlier.

Sales edged up 2 percent to $136.1 million from $133.0 million. Retail sales rose 13 percent to $92.2 million, but wholesale sales tumbled 17 percent to $35.5 million, and online consumer sales slid 4 percent to $8.4 million.

Analysts polled by Thomson Reuters, on average, expected profit of 3 cents per share on slightly higher revenue of $140.2 million. Those estimates typically exclude one-time items.