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Robbins Geller Rudman & Dowd LLP Files Class Action Suit Against American Apparel, Inc.

^{Published on 2010-08-25 15:20:39 - Market Wire}
 

SAN DIEGO--([ BUSINESS WIRE ])--Robbins Geller Rudman & Dowd LLP (aRobbins Gellera) ([ http://www.rgrdlaw.com/cases/americanapparel/ ]) today announced that a class action has been commenced in the United States District Court for the Central District of California on behalf of purchasers of American Apparel, Inc. (aAmerican Apparela) (AMEX:APP) common stock during the period between December 20, 2006 and 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."

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiffa™s counsel, Darren Robbins of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at [ djr@rgrdlaw.com ]. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at [ http://www.rgrdlaw.com/cases/americanapparel/ ]. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

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 Robbins Geller, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Robbins Geller, a 180-lawyer firm with offices in San Diego, San Francisco, New York, Boca Raton, Washington, D.C., Philadelphia and Atlanta, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. The Robbins Geller Web site ([ http://www.rgrdlaw.com ]) has more information about the firm.