American Apparel turns to Groupon to increase sagging sales

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Another major retailer has jumped on the daily deals bandwagon.

A week after American Apparel Inc. reported double-digit declines in its third quarter, the beleaguered Los Angeles clothing maker showed up on Groupon on Thursday offering $50 worth of its hipster merchandise for $25.

Daily deals websites such as Groupon and LivingSocial have become a social media phenomenon in recent months. The sites offer a deal of the day, usually for 50% to 90% off the regular value, from local businesses such as spas, restaurants, museums and outdoor activities.

As the trend has grown, it has started to attract larger retail chains. Apparel giant Gap in August sold $50 gift certificates for $25 on Groupon -- shoppers nationwide snapped up 445,000 of them in just 24 hours. A more recent Groupon offer was a $20 deal for $40 worth of merchandise at the Body Shop.

By noon Thursday nearly 6,000 American Apparel Groupons had been purchased in the Los Angeles market alone. The deal is valid in-store only and not available on shoes, sale items and other categories.

For the quarter ended Sept. 30, sales at American Apparel totaled $134.5 million, a decline of 10.5% from the same quarter last year. At stores open at least a year sales fell 16%, a troubling sign considering the relatively healthy sales that competitors have been reporting in recent months.

Earlier this week, founder and CEO Dov Charney disclosed that he had bought 1.18 million more shares of the company’s stock for $1.21 to $1.23 per share. His stake now stands at 53%.

American Apparel shares were up 4 cents, or 3%, to $1.37 at midday.

-- Andrea Chang