American Apparel in audit spat

Retail group American Apparel said yesterday its operating losses may result in its breach of its debt covenant, and that it has received a subpoena from the US attorney’s office over changing accounting firms. Shares dropped by more than 25 per cent following the announcement, which revealed that previous auditor Deloitte told the firm its 2009 financial statements may not be reliable when it severed ties. The company said it may have to delist from the New York Stock Exchange if it cannot file its financial reports with a new auditor in time.