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American Apparel's Future Uncertain

American Apparel's future is at risk, as the company warns its liquidity it dwindling.



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American Apparel's

(APP) - Get Applovin Corporation Report

stock is taking a blood bath after the apparel retailer warned its dwindling liquidity may not be enough to make it through the year.

American Apparel said on Tuesday that it may be unable to repay a loan due in September and is currently in talks with creditors.

As of the end of the second quarter, its debt rose 32% to $120.3 million.

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American Apparel said it would delay its second-quarter earnings report after its accounting firm resigned last month. American Apparel is predicting a loss between $5 million and $7 million on sales of $132 million to $134 million. In the second quarter last year the company reported a profit of $7.3 million on revenue of $136.1 million.

American Apparel also expects same-store sales to plunge 16% and gross margin to fall between 50% and 52%, down from 59%.

Shares of American Apparel are plunging 15.8% to $1.17 in morning trading.

-- Reported by Jeanine Poggi in New York.

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