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American Apparel Makes Major Cuts

After reporting about a month ago that the American Apparel brand was under siege, the struggling retailer confirmed on Monday that it had sent notices to almost 3,500 employees warning them of potential layoffs.

The Los Angeles Times reports that after filing for bankruptcy last month, American Apparel notified workers at three of the company’s production facilities in Southern California that their last day of work could be Jan. 6. This year has been particularly tough for the brand, as they have let of of at least 500 workers thus far, in trimming down its production process.

There’s still a glimmer of hope, however, as the company noted on Monday that the WARN notices — required by California — were “purely a legal precaution” and that “layoffs are not certain,” though it does not look all too promising.

It comes down to whether or not Gildan Activewear’s $66 million bid to buy American Apparel’s intellectual property rights and some other assets is successful. Gildan also might be interested in buying some of American Apparel’s manufacturing plants, which would save jobs in the U.S.

The Consumerist reports that even though the retailer agreed to be acquired by Gildan, American Apparel’s bankruptcy filing allows for an auction that would let other buyers make competing bids. While one requirement for bidders is that they be committed to manufacturing clothes in the United States, those jobs could move anywhere in the country.

Gildan has bid on the company’s intellectual property and manufacturing operations, but not on its retail stores, which would go to another buyer or simply liquidate and close. The company’s stores in the United Kingdom and Australia will close after the holidays.

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