How Is American Apparel Performing Against Original 2012 Guidance?

On March 14, 2012 American Apparel released the following guidance for fiscal 2012 results:

 

Initial 2012 Outlook

For 2012, the Company is initially projecting adjusted EBITDA to be in the range of $32 million to $40 million. The outlook assumes net sales between $552 million and $559 million and a gross profit rate between 54.5% and 55.8%.  Raw material costs are estimated at current prices and foreign currency exchange rates are estimated to remain at current levels. Capital expenditures are estimated at $15.9 million for the year with a modest number of new store openings.

The company's outlook assumes a sales growth rate of about 2%. Here are the results to date in 2012. We are including a normalized growth rate (last line) which account for stores closure.

 

With sales growth rates closer to +15% on an adjusted basis and with the impact of store closures waning in August, we're thinking that American Apparel could beat its EBITDA forecast by a wide margin.

 

What do you think?

 

Written by Michael Bigger. Follow me on Twitter and StockTwits. 

P.S. Please do your research before you trade the stock.  This is a highly risky situation and it is not suitable for the majority of investors. The purpose of the post is to write down how I think about this and share it with you.  I am currently long APP.