American Apparel's auditing firm resigns; stock plunges 14%
More bad news for struggling American Apparel.
The Los Angeles retailer's stock fell 14% Thursday after a company filing said Deloitte & Touche had resigned as its independent public accounting firm.
In the filing with the Securities and Exchange Commission on Wednesday afternoon, American Apparel said Deloitte resigned July 22 after about 15 months with the company. The filing said that in a Deloitte report dated March 31, the accounting firm identified "material weaknesses in internal control over financial reporting" and advised that American Apparel hadn't maintained effective internal control over financial reporting as of Dec. 31.
"Deloitte advised the company that certain information has come to Deloitte's attention, that if further investigated may materially impact the reliability of either its previously issued audit report or the underlying consolidated financial statements for the year ended December 31, 2009 included in the company's 2009 Form 10-K," it said.
This Monday, American Apparel hired Marcum as its new independent auditor.
Founder and Chief Executive Dov Charney, reached by phone in New York on Thursday afternoon, said American Apparel was "feeling positive about working with Marcum."
"We feel it’s a good step for the company," he said.
Shares of American Apparel fell 26 cents, or 14.4%, to $1.55.
-- Andrea Chang