Global clothing manufacturer American Apparel presented its financial results for Q2 of 2008 and for the six month period ended June 30th. The company’s Net sales came to $133.0 million, with an increase of 38.9% from the second quarter of 2007. Total retail sales increased with 58% to $81.3 million from $51.3 million for the prior year second quarter, with comparable store sales for stores open at least 12 months rising 23%.
American Apparel ended the second quarter of 2008 with 195 stores, having opened 9 stores in the period. The company operated 154 stores at the end of the second quarter of 2007. Total wholesale sales increased to $51.7 million for the second quarter of 2008, as compared to $44.4 million for the second quarter of 2007, an increase of 16.4%.
Gross margin for the second quarter of 2008 increased to 59.5% from 56.5% for the prior year second quarter. The increase in gross margin was primarily the result of an increase in the mix of sales coming from retail sales and online consumer sales, which generate a higher gross margin than wholesale sales. This benefit was partially offset by the impact of hiring of approximately 1,400 new manufacturing employees in the second quarter of 2008 to support increased production. During the period, American Apparel began operating a fabric dyeing and finishing facility in Garden Grove, California, which it purchased in May. Gross margin for the U.S. Wholesale segment decreased to 28.4% in the second quarter of 2008, versus 28.9% in the second quarter of 2007.
Operating expenses for the second quarter of 2008 increased to 47.7% of net sales, versus 43.9% for the second quarter of 2007. Operating expenses increased due to higher payroll, rent and occupancy expense related to the growth in the number of retail stores from 149 as of 1st April 1 2007 to 195 as of 30th June 30 2008, and an increase in advertising expense. Operating income for the second quarter of 2008 increased 29.4% to $15.6 million from $12.1 million in the second quarter of 2007. Operating margin declined to 11.8% in the second quarter of 2008 compared to 12.6% in the prior year second quarter as a result of higher operating expenses offsetting the gross margin increase in the quarter.
As of the end of July, American Apparel had opened 20 new store locations since the beginning of the year. The company currently has 40 signed leases for retail stores in its pipeline. American Apparel employees over 9,000 people and operates 200 retail stores in 16 countries, including the United States, Canada, Mexico, United Kingdom, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan and South Korea.
Image: American Apparel
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