American Apparel Files for Bankruptcy

Early Monday morning, American Apparel — a retailer known as much for its controversies and envelope-pushing ads as it is for its spandex — filed for bankruptcy protection, citing $311 million in debt, sales declines, employee dissatisfaction and lawsuits, several involving twice-ousted founder and former CEO Dov Charney, as causes. This doesn’t come as a surprise — back in August, the company sent out a press release expressing doubts it would stay afloat for another year considering its poor financial health. In July, the company initiated a series of store closings and layoffs as part of a plan to cut costs and refocus on revamping its product offerings and rethinking its infamously risqué brand image.

As for what this immediately means for the brand, 130 brick and mortar stores will remain in the United States and manufacturing operations will continue in Los Angeles. The bankruptcy still needs to be approved by the court and if it moves forward, would put lawsuits — which ranged from sexual harassment to labor complaints — against the company on hold. In its report this morning, The New York Times stated that the company’s dedication to U.S.-based manufacturing made it difficult for the brand to keep up with other fast-fashion competitors reliant on overseas production like Zara and H&M with a quicker turnaround for trendy clothing. CEO Paula Schneider told the Times, “We will continue to manufacture in America. That’s what the brand is. That’s what it’s about.”

 

 

[“source-cosmopolitan”]