Be careful..money flow into retail sector is weak at best..
however
American Apparel hits low after financing change
Monday December 22, 8:18 pm ET
American Apparel shares reach new low as analyst lowers estimate after financing change
NEW YORK (AP) -- Shares of American Apparel Inc. hit a new low on Monday, after an analyst said the company will have to pay more for financing, after it changed some terms of a credit agreement, and lowered his estimates and price target on the apparel retailer.
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The stock declined 11 cents, or 4.8 percent, to $2.19, after earlier reaching an all-time low of $2.02. Shares have traded between $2.23 and $15.28 during the past year.
On Friday, the company said it changed terms of its revolving credit and second-lien credit facilities to extend maturities of the loans for three months. The clothing retailer said the amendments give it the ability to operate while looking for more longer-term financing with its lenders and other parties.
Lazard Capital Markets analyst Todd Slater said the financing change basically amounts to extended financing granted under tougher terms. He lowered estimates on the company due to the increased cost of financing and lower retail and sales estimates.
He now expects 2009 earnings of 51 cents per share, down from 60 cents per share. Analysts polled by Thomson Financial, on average, predict a profit of 52 cents per share.
"Though we believe American Apparel operates a resilient and geographically diversified model, heightened sensitivity to the weakening global macroeconomic conditions can't be ignored," wrote Slater, who rates the company "Buy."
He lowered his price target to $14 from $17.
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