American Apparel Investors Vote Against Boosting Share TotalMatt Townsend
American Apparel Inc. investors voted against a proposal at Thursday’s annual meeting that would have boosted the number of shares it can issue, possibly decreasing how much money the cash-strapped retailer can raise.
The company has about 180 million shares outstanding, with authorization to increase that to 230 million. The shareholder proposal would have boosted the authorization to 460 million, according to a proxy statement. The vote against the measure was confirmed by David Glazek, a board member.
American Apparel, which has posted net losses of more than $300 million since 2010, said last week it would close stores and lay off employees to cut $30 million in costs. Even with the moves, the company said it still may have to raise capital to meet funding requirements for the next year.
Chelsea Grayson, American Apparel’s general counsel, declined to comment.
The retailer has been embroiled in a battle with founder Dov Charney since the company fired him in December for allegations of personal and financial misconduct. His ouster and those claims, which Charney has denied, have led to a legal battle that includes more than a dozen lawsuits.
Charney still has shared voting rights on 41 percent of American Apparel’s stock, along with Glazek’s firm, Standard General.
Meanwhile, the company’s performance has continued to decline. In the first quarter, sales fell 9.4 percent and the net loss was $26.4 million. At that time results were announced on May 12, the company also said it would raise as much as $10 million by selling shares from time to time in the market. As of June 15, the chain had sold 3.5 million shares.
American Apparel’s stock has also suffered. Shares of the company, which is based in Los Angeles, have declined 67 percent this year.
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