American Apparel shares plummet again

By Julianne Pepitone, staff reporter

NEW YORK ( -- Shares of American Apparel plummeted another 21% Wednesday, on top of a comparable drop the previous day, as the casual clothing chain said accounting troubles that have put it on the brink of closing have led to investigations.

American Apparel (APP) shares were off 22 cents to 81 cents. The stock dropped 22% Wednesday when the Los Angeles-based retailer said a steep sales slump and manufacturing problems could cause the company to default on its loans.

In a government filing Tuesday, American Apparel said the U. S. Attorney's Office for the Southern District of New York sent it a subpoena relating to the circumstances around Deloitte & Touche's resignation as the company's auditor last month.

The filing also said the Securities and Exchange Commission has made inquiries into the situation.

American Apparel said Deloitte is investigating the "reliability" of the company's consolidated financial statements for all of 2009, the company's financial results for the first quarter of 2010 and its projected financial results for the rest of 2010.

Officials for the U.S. Attorney's office in New York and the SEC both declined comment. Deloitte representatives did not immediately return a call for comment.

Defaulting on its loans could sink the company within the next 12 months, the company said. American Apparel added it is in talks with its creditors to amend its loan agreements.

American Apparel said it expects to post a loss from operations of between $5 million to $7 million for the second quarter. It also warned losses from operations would continue into its third quarter. To top of page

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