American Apparel in trouble?

Serious liquidity worries and a US federal subpoena for the clothing chain.

US CLOTHING CHAIN American Apparel says it may not have enough money to continue operating for the coming year.

The company reported a preliminary second-quarter loss of between $5 million and $7 million today, and said it may not have enough liquidity to cover itself for another year.

The company said it expects its losses to continue into the third quarter. It opened its Grafton Street branch just over a year ago, on 30 July, 2009.

Shares in the company plummeted by over a quarter today after preliminary losses were announced and news broke the company had been subpoenaed over its change of accountants.

The company’s independent auditor Deloitte & Touche resigned earlier this year, and the chain hired Marcum which had audited American Apparel from 2005 to 2008.

American Apparel shares have fallen by 67% this year.

Company chief executive, Dov Charney, is known for controversial antics like personally photographing models in sexually suggestive photo shoots.