American Apparel Vacating One of Two Industrial Buildings
American Apparel has renegotiated its lease, saving the Los Angeles clothing company millions of dollars and giving up one of its two industrial buildings.
Starting next year, American Apparel will vacate a 400,000-square-foot building but continue to occupy a second 400,000-square-foot structure, where the company’s corporate office and manufacturing operations are located at Alameda Square near downtown Los Angeles. Giving up one of the two buildings it uses will save the clothing company $2.1 million a year.
In a filing with the Securities and Exchange Commission, the company said the mammoth structure it plans to vacate is under-utilized and does not house any manufacturing or distribution operations. The building American Apparel will vacate is the location for the company’s factory outlet store and is also utilized to store fabric.
According to the regulatory filing on July 31, the second building will be vacated on or before March 31, 2016.
In addition, American Apparel has renegotiated its lease, signed in 2009 and held by Alameda Square Owner LLC, to reduce rent, fees, interest and reimbursements from $2.95 million to $1.8 million incurred primarily during the first half of 2014. American Apparel will be paying that $1.8 million in 11 installments that start April 1, 2016, and end on Feb. 1, 2017.
Furthermore, American Apparel has gotten the base rent for the remaining premises reduced by 50 percent, starting April 1, 2016.
American Apparel is fighting to stay afloat financially after ousting the company’s founder, Dov Charney, late last year as the chief executive officer.
Over the last five years, American Apparel’s net losses have totaled more than $338 million. Its stock is trading on theNew York Stock Exchange at only 20 cents a share, near its 52-week low of 16 cents a share and far from its 52-week high of $1.20.
The company, now under the helm of the new CEO, Paula Schneider, who came on board Jan. 5, still has not turned a profit this year. For the first quarter of 2015, American Apparel had a net loss of $26.4 million on net sales of $124.3 million. On Oct. 15, American Apparel has a $13.7 million payment due to bondholders.