To say that American Apparel (AMEX: APP) is a unique company is like saying that Tiger Woods is a talented athlete: you have a CEO who receives oral sex from employees during interviews, tells reporters that his company's CFO is a "complete loser," and the company has taken out ads promoting its controversial views on immigrations laws. Then, just for fun, the company is being sued by Woody Allen.
But when you get past all the weirdness, you have a company that reported comparable store sales growth of 25% for July, in one of the toughest environments for retailers in recent memory.
Portfolio reports that American Apparel is making significant investments in advertising on MySpace and Facebook -- social networking sites that target the young, hip demographic that is the company's stronghold. According to comScore's data for April, American Apparel placed 483 million internet display ads -- more than apparel giant Nike!
Many companies have been wary of social networking sites as outlets for ads because, as cool as the users might be, they also tend to be broke. But it's hard to argue with 25% same store sales growth.
Shares of American Apparel are down more than 50% from where they traded as recently as December -- it seems that the market just doesn't have an appetite for a hot retail play right now.
Once you strip the kinkiness out of the American Apparel story, the stock looks cheap -- the question is, how much of the market's skepticism is justified?
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