NEW YORK ( TheStreet) -- American Apparel (APP - Get Report) shares sank to a new 52-week low Wednesday after the retailer with the controversial ads said it received a delisting warning, may not be in compliance with a covenant under its credit agreement, and widened its first-quarter loss.
The projected covenant non-compliance may impact the company's ability to carry out its operating plan for 2010, American Apparel said in a statement. The company is working with its second-lien lender to obtain amendments to the total-debt-to-adjusted-EBITDA covenant at June 30.
The New York Stock Exchange also warned American Apparel that it must submit a plan to return to compliance by June 1, and must achieve that compliance no later than Aug. 16 or face a delisting of its stock.
Shares of the maker and seller of hipster T-shirts and other cotton leisure wear were plunging 25.2% to a new low of $2.01 in morning trading Wednesday.American Apparel said its preliminary first-quarter loss widened to $17.6 million from a loss of $3.9 million in the year-ago period. Sales grew 6.6% to $121.8 million, but same-store sales tanked 10%. The company refrained from providing guidance, due to its "highly uncertain sales trends." American Apparel's total debt increased to $91.4 million from $83.4 million in the fourth quarter. Reported by Jeanine Poggi in New York. Follow Jeanine Poggi on Twitter and become a fan of TheStreet on Facebook.