More Financial Woes for American Apparel

An American (Apparel) in Berlin? This popular store sits among many small European boutiques, but also near a Lee Jeans store, on Alte Schonhauser Strasse in Berlin. But shoppers, be ready to pay: its prices aren't adjusted for the conversion rate. CBS / Christine Lagorio

American Apparel expects to report a loss in the second quarter and requested additional time to file its financial report after the resignation of its auditor, Deloitte & Touche.

It is the latest bump for the hipster clothing chain. The company said in May that it expected a loss for the first quarter, but it hasn't filed that quarterly report with the Securities and Exchange Commission either.

If the company fails to file that report by Monday, it faces potential delisting from the American Stock Exchange.

American Apparel, known as much for its racy ads as its inexpensive leggings and T-shirts, has expanded rapidly since going public in 2007. In a filing late Tuesday with the SEC, American Apparel cited that rapid growth, as well as lower retail revenue.

Deloitte & Touche resigned as American Apparel's auditor after the accounting firm said it found material weaknesses in internal controls over financial reporting. Deloitte requested more information from the company to determine if there were problems in previous financial reports. American Apparel said Tuesday it was working to provide that information.

In the meantime, American Apparel hired back Marcum, its former auditor. American Apparel, based in Los Angeles, said Marcum needs more time to review procedures for the first two quarters of the year.

American Apparel Inc. opened its first retail store in 2003 and has made headlines with racy ads and the outre behavior of its CEO Dov Charney.

It was taken public by Endeavor Acquisition Corp. in 2007 and now operates about 260 stores in 19 countries.
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