PeHUB reported on its website on Tuesday that American Apparel was working with adviser Rothschild to explore a sale, citing three people familiar with the matter.
American Apparel is absolutely not looking for buyers, Peter Schey, a spokesman for the company, told Reuters.
The CEO is confident that 2011 will be a turnaround year and he is looking for profitability in 2012 - that's his goal, Schey said.
American Apparel has been dealing with a long-running sales slump. Founder and Chief Executive Dov Charney has been dealing with problems of his own, including charges that he treated an ex-employee as a sex slave.
The peHUB report said it was unlikely that any buyer will permit Charney to remain with the company.
Charney, when contacted over telephone, declined to comment.
In a filing last week, American Apparel had warned that it may have to file for bankruptcy if it does not get enough money to keep running.
Tuesday's news report also said Lion Capital, one of the company's largest creditors, has hired restructuring firm Miller Buckfire & Co in case developments push the company toward a Chapter 11 bankruptcy.
American Apparel shares were trading down 4 percent at $0.79 Wednesday afternoon on the American Stock Exchange.
(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Robert MacMillan, Roshni Menon)