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American Apparel Inc. (APP) Reports Comparable Store Sales

In poor economic times there is really nothing better than comfort food, a soft sweatshirt and a good book. Finding companies that provide these items, or components of them, is a way to profit. To get an idea of some of these types of products, consider what you wear Saturday mornings or what you ate or baked during the last big storm. Consider these thoughts and a winner may just pop-up.

American Apparel Inc., a manufacturer of casual wear for men, women, children and pets, works to manufacture, distribute and retail for the everyday customer. Although it has a large product catalogue, it tends to work toward T-shirts, denim products, jackets and other more casual wear such as socks. As of May 2009, the company operated 270 retail stores in 19 countries. The company also operates a fairly substantial website.

Although most may be familiar with American Apparel’s cotton sweat shirts and sweat pants of yesteryear, they would likely not be all that familiar with many of the company’s current offerings. Its new lines are sleek and glossy and geared to a new generation. Price points have always been a solid selling factor for the company since its inception and remain a driver in getting traffic through the doors. Comparative store tracking for 2009 showed little difference although 2009 did not fare as well as 2008 for same store sales.

From the finance side, the company appears to be doing well. The vertically integrated apparel game is a different animal when it comes to cash management and needs to be watched closely so resources do not become drained. At the same time a company does not want to carry too much operating capital. American Apparel appears to have a solid relationship with Bank of America where they can fill orders, ship and pass ownership quite easily. One area where the company had a slight issue in 2009 was foreign currency exchange, although this was not quite as severe as one might expect. As the world economy stumbles along, low cost, comfortable basic clothing will be a stable winner.

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