American Apparel warns the end is near

Politically correct clothing company American Apparel -- which made a name for itself manufacturing its clothing in the U.S.A. -- is proving how painful it is to be hip. The company warned yesterday that it may not have enough cash or credit to stay afloat for much longer.

American Apparel lost money for its second quarter -- between $5 million and $7 million. Last year at this time, the company earned $7.3 million. It also warned that as Sept. 30, there's a very real risk it will fail to comply with loan agreements, and may not be able to continue operations. In very real terms, American Apparel may be facing bankruptcy.

Teen retailers are hurting. Abercrombie & Fitch is closing stores, 60 of them in the U.S., even though the company posted a profit as sales increased 17%. last year, Abercrombie lost $26.7 million. It's had to lower prices on goods to do it. Seems teens aren't spending like they used to. Many of the summer or part-time jobs typically held by teens and college students are being filled with older workers looking to make ends meet. And parents aren't spending as much on their kids as before. It's a lose-lose for retailers like American Apparel and Abercrombie & Fitch.