American Apparel (APP) - Get Report shares plunged nearly 20% in morning trading on Tuesday, after an analyst downgraded the retailer.

Lazard Capital Markets analyst Todd Slater downgraded the company to hold from buy, a day after American Apparel said it swung to a loss in the first quarter and cut its full-year outlook.

Slater said in a note to investors that American Apparel's revenue growth has been interrupted by the weak economic environment, self-cannibalization and a stronger dollar, three issues which are not likely to abate anytime soon.

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"We expect (same-store sales) to remain depressed for most of the year, and wholesales sales could contract double digits into the future," he wrote. Increased operating expenses are also hurting results, he said.

Hurt by higher operating expenses and lower liquidity during the quarter, the company recorded a loss of $9 million, or 13 cents a share, from a profit of $1.1 million, or 2 cents, in the year-ago period.

Sales increased 2% to $114.3 million from $111.6 million last year, while comparable sales declined 7%.

The company now expects sales in the range of $550 million to $575 million, and income from operations in the range of $40 million to $50 million. American Apparel had previously forecast sales in the range of $575 million to $600 million.

On Monday, American Apparel also

settled a lawsuit

with Woody Allen, paying the director $5 million for using his image in an advertising campaign.

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