American Apparel shares drop

American Apparel witnessed its shares drop 32 percent after news broke that the US fashion retailer had

approached lawyers at Skadden, Arps, Slate Meagher & Flom LLP for advice concerning restructuring options.

The fashion retailer has been plagued by heavy debt and weak sales for quite some time now, according to inside sources at the Wall Street Journal and has asked restructuring advisers for help with future options, although it is unsure what strategy American Apparel will under take, noted the newspaper.

American Apparel currently has roughly 240 million dollars in debt which they are struggling with and it is thought that a restructuring of the debt could lead to the company filing for bankruptcy. The US fashion retailer commented that they were having difficulty making the transition to its distribution center and expects that it will only be able to complete the change by the third quarter of 2014.

The US fashion retailer, who is known for its vivid Made in the US clothing range and reported that January same-store sales fell five percent, with total sales down one percent because of the cold spell that hit the country last month.