American Apparel is finally starting to turn around, and CEO Dov Charney is already making some bold statements. This morning on CNBC, Charney said that American Apparel’s “gross margins are as high as a luxury brand like Prada’s.”
That’s hard to believe since American Apparel sells hipster trendy clothes and Prada’s a high-markup luxury brand. Is it really true?
According to the most recent data from the SEC and SEHK, American Apparel’s gross margin each quarter over the past few years has hovered between 50 and 60 per cent, whereas Prada’s has been around 70 per cent.
[After we posted this article, Dov Charney and an American Apparel fund manager called us with some data, which the manager later sent via email:
“American Apparel’s gross margins at retail are around 70 per cent while Prada’s blended average are roughly 65 per cent, so we stand behind the statement made by Dov on CNBC this morning. The bigger story should be how a company that sells basic apparel is able to command a premium that is markedly higher than its ‘competitors’ such as Gap (30 per cent) and that is due to the strength of the brand with consumers and the vertical integration of the business model.”]
Last month, the company got an $80 million cash infusion from George Soros’ Chrystal Financial to help return the company to profitability.
When asked about the nine lawsuits he’s dealt with in the past few years, including claims of sexual misconduct — which played a huge role in jeopardizing the company’s bottom line — Charney said, “Nine lawsuits — that’s a testimony to success.”
CNBC host Jane Wells also pressed him on if he’s inappropriate or, at the least, weird.
Charney responded with: “Weird? I like weird.”
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