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Abraham, Fruchter & Twersky, LLP Announces That It Has Been Retained to File a Class Action against American Apparel, Inc.

^{Published on 2010-08-25 16:15:40 - Market Wire}
 

NEW YORK--([ BUSINESS WIRE ])--Abraham, Fruchter & Twersky, LLP has been retained to file a class action law suit on behalf of purchasers of American Apparel, Inc. (aAmerican Apparela or the aCompanya) (AMEX:APP) stock during the period between December 20, 2006 through August 17, 2010 (the aClass Perioda).

"lower labor efficiency at the Companya™s production facilities in the second quarter of 2010 compared to the prior year period. The lower labor efficiency was primarily a result of the hiring of over 1,600 net new manufacturing workers during the second quarter of 2010."

The complaint charges American Apparel and certain of its officers and directors with violations of the Securities Exchange Act of 1934. American Apparel purports to be a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel.

The complaint alleges that during the Class Period, defendants made false and misleading statements about the Companya™s hiring practices and the effect of such hiring practices on the Companya™s financial performance. Specifically, defendants falsely stated that they made adiligent effortsa to comply with employment and labor regulations, and failed to disclose, and made false statements to shareholders regarding, the effect of the Companya™s illegal hiring practices on its operating costs and margins. Beginning in July 2009, after the Company revealed that it was being investigated by U.S. Immigration and Customs Enforcement regarding its compliance with U.S. immigration law, the true financial condition of the Company began to be revealed. However, defendants assured investors that such investigation would not have a material effect on American Apparel.

Then, on August 17, 2010, the Company issued a press release announcing that the Company expected to report a loss of $5 million to $7 million in the second quarter of 2010 on net sales of $132 million to $143 million. According to the press release, a significant factor in such losses was alower labor efficiency at the Companya™s production facilities in the second quarter of 2010 compared to the prior year period. The lower labor efficiency was primarily a result of the hiring of over 1,600 net new manufacturing workers during the second quarter of 2010.a By August 18, 2010, as this news was digested by the market, American Apparela™s stock price had declined rapidly, from a close of $1.39 per share on August 16, 2010, to a close of just $0.81 per share on August 18, 2010 a" a decline of over 41%.

Plaintiff seeks to recover damages on behalf of all purchasers of American Apparel common stock during the Class Period (the aClassa). The Plaintiff is represented by Abraham, Fruchter & Twersky, LLP which has extensive experience in securities class action cases, and the firm has been ranked among the leading class action law firms in terms of recoveries achieved by a survey of class action law firms conducted by Institutional Shareholder Services. If you would like to discuss this action or if you have any questions concerning this notice or your rights as a potential class member or lead plaintiff, you may contact: Jack Fruchter or Arthur J. Chen of Abraham, Fruchter & Twersky, LLP at 212-279-5050, or via e-mail at [ jfruchter@aftlaw.com ] or [ achen@aftlaw.com ], respectively. If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. Any member of the proposed class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed class.

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