American Apparel
Team 15
Ryan Wong
Kevin Liu
Yuan Zhang
Cameron Lucero
Henna Kabra
Shawn Yu
Thao Ngo
Was Charney’s recovery plan successful?
Charney’s Plan
“Dov, in his upbeat spirits, made an extensive plan for the recovery of the company through improving the operating performance, overhauling of the entire process of inventory management and severely trying to crush the cost while focusing on getting the required EBIT quarter by quarter in order to meet the requirements of heavy debt that it has taken.”
Key Financial Issues
Horizontal Analysis
Balance Sheet
Quarterly from 2011 to 2012
Total assets increases by 2.7%
Total liabilities increases by 15.6%
Total stockholders’ equity decreases by 71%
Annually from Dec 2010 to 2011
Total assets decreases by 1%
Total liabilities increases by 9.4%
Income Statement
Three months ended Sep 30
EBITA decreases by 27568%
Net loss increases by 16428%
Nine months ended Sep 30
EBITA decreases by 72%
Net loss increases by 50%
Vertical Analysis
Balance Sheet:
Quarterly from Dec 11, 2011 to Sep 30, 2012
Current assets is 71% in 2011 & 70% in 2012
Current liabilities is 52% in 2011 & 57% in 2012
Total stockholders’ equity is 15% in 2011 & 4% in 2012
Annually from Dec 2010 to 2011:
Current assets is 66% in 2010 & 71% in 2011
Current liabilities is 85% in 2010 & 52% in 2011
Income statement:
Three months period:
EBITA is -2% in 2011 & 3% in 2012
Net loss is 5% in 2011 & 12% in 2012
Nine months period:
EBITA is -5% in 2011 & -1% in 2012
Net loss is 7% in 2011 & 9% in 2012
Financial Ratios
Debt-to-equity:
Total liabilities/ Shareholders’ equity
319768 / 13877 = 23
Current ratio:
Current assets / Current liabilities
232858 / 180766 = 1.2
Return on equity:
Net income / Shareholders’ equity
(-19012/13877) x 100 = -137%
Extent of loss:
Net loss / Net sales
19012 / 162160 = 0.11
Our Plan
Limit Brick and Mortar
Rebrand
Improve Ecommerce
(Short Term)
(Short Term)
(Long Term)
Limit Brick and Mortar Stores
143
71
Rebrand
Improve Ecommerce
Financial Plan
Sales Forecast (U.S. Only)
Sales Forecast With Changing Retail
Ecommerce Replacing Our Retail Sales (for nine months ending in september)
Expenses
Key changes:
$4,437,500 left over from closing 50% of US brick and mortar stores
-$300,000 for rebranding marketing campaign
-$990,000 for warehouses
-$12,000,000 for e-commerce infrastructure (shipping, etc.)
_____________________________________________
$8,852,500 needed from investors
Incentives to Obtain our Loan
Retail e-commerce sales worldwide from 2014 to 2019 (in billion U.S. dollars)
Seeking a total of 9 million dollars
Why should they invest?
-Firing Charney
-Made in America
-Vision for Ecommerce
Assets and Liabilities
Key changes:
Property (Assets):
$65,959,000 (existing)
-$4,437,500 (from cutting retail 50%)
+$990,000 (warehouses)
____________________
$62,512,000
Long Term Debt (Liabilities):
$97,142,000
+$9,000,000
______________
$106,292,000
Break Even Analysis
2011 Net Loss : -$9,008,640
Total sales 2016:
$186,494,000
Total sales 2011:
$175,435,000
$186,494,000
-$175,435,000
=$11,590,000
2016 Net Profit: $11,590,000
2011 | 2012 | 2013 | 2014 | 2015 | 2016 |
5 Years
Domestic Sales:
How many years will it take to pull American Apparel out of loss?
Summary
Our new vision
Rebranding campaign
Ecommerce model
5 years
Thank You