American Apparel says it may have to go out of business by Phil Wahba @FortuneMagazine August 17, 2015, 6:23 PM EDT E-mail Tweet Facebook Linkedin Share icons Troubled clothing retailer American Apparel APP said on Monday that its business and cash position have deteriorated so badly that it is not even sure it will be able to stay in business, in its strongest warning yet to investors about its prospects. American Apparel, which ousted its founder and former CEO Dov Charney last year, reported that sales for its second quarter fell 17.2% to $134.4 million, continuing a downward spiral in the last several years that has severely drained its coffers. The company said it does not expect business to materially improve in the next four quarters and that it may not have enough cash to get through that period. “We believe that we may not have sufficient liquidity necessary to sustain operations for the next twelve months. These factors, among others, raise substantial doubt that we may be able to continue as a going concern,” the company said in a regulatory filing on Monday evening. American Apparel said that because it tripped a debt covenant with a key lender, Capital One, it is looking into ways out of its jam, including refinancing debt, raising new equity and other restructuring or new capital raising transactions. The next scheduled interest payment on its debt is due October 15 and in the amount of $13.9 million, according to the filing. That’s more than the cash American Apparel has on hand and more than its current borrowing capacity. The company, which is still feuding with founder and ex-CEO Dov Charney, announced a plan two months ago to get back on its feet, relying less on sexy (or sexist, depending on whom you ask) imagery and more on better merchandise and more enticing stores. American Apparel shares have fallen 87% this year and were trading at 14 cents at market’s close on Monday, levels that indicate Wall Street sees little chance of avoiding a bankruptcy.