American Apparel sales continue to drop

American Apparel announced on Monday its financial results for its third quarter which ended September 30, 2014.

The company posted heavy Q3 losses after the clothing chain’s sales fell the most since Q4 2010 with higher expenses in addition to one-time costs. The company's net loss for the third quarter was $19.18 million or $0.11 per share, wider than net loss of $1.51 million or $0.01 per share in the year-ago quarter. Revenue fell 5.3 percent to $155.9 million, the biggest decline since the fourth quarter of 2010.

Interim CEO Scott Brubaker commented positively on the results saying, “The strength of American Apparel’s operating model is evident in the 38% year-over-year improvement in adjusted EBITDA. We are proud to have achieved this growth during a period of company-wide operational restructuring and in a challenging macro-economic environment for retailers. I am encouraged by these results, and am optimistic about the future prospects of the business.”

AA is still reeling from its ouster of CEO and founder Dov Charney, who has been accused of sexual and financial improprieties. Charney is working as a paid consultant to the company and his future there is still a matter of discussion.

The company said it is negotiating with hedge fund Standard General Group for a $15 million unsecured credit agreement between one or more entities affiliated with Standard General and one or more of the company's foreign subsidiaries as borrowers. The company expects to enter into this credit agreement in the fourth quarter of 2014.

American Apparel's investigation of founder Dov Charney, who was ousted from his role as CEO in June after allegations of sexual misconduct surfaced, is costing the company money. The cost of the legal fees and investigation relating to Charney’s suspension totaled $5.3 million last quarter.