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Make American Apparel Great Again

Clothing brand American Apparel has recently filed for bankruptcy, heading into an auction next month to try and salvage what is left of its brand. No, you are not reading an old article, the company is back to where they were no less than a year ago.

The brand is counting on buyers to step up and give them a somewhat-decent price for their business, as their only deal at the moment is $66 million from Gildan Activewear.

Gildan’s offer is the “highest, best, and only viable bid” received in American Apparel’s three month search, falling well short of the $215 million in debt left on the company’s shoulders.

In a letter to employees, American Apparel pleaded business as usual, as it invites bidders to top this $66 million dollar deal and help keep some of its doors open. The Wall Street Journal reports that the company has lined up a $30 million bankruptcy loan designed to keep American Apparel in operation until a sale can be closed, according to court papers from Mark Weinstein, the outside restructuring executive who has been advising the ailing company. If the bankruptcy court refuses to sign off on the retailer’s financial lifeline, however, American Apparel will run out of cash by next week, say court papers, and the chapter 11 sale effort will become a full-blown liquidation.

In the days leading up to its inevitable bankruptcy, American Apparel commenced winding down certain affairs across the world, including countries like Ireland, Germany, Canada, and Japan in part of a foreign sprawl that included over 80 stores.

Many link these events to the brand’s former CEO, Dov Charney and his allegations of sexual harassment and other behaviors before being terminated in December of 2014. These allegations led to over $3.5 million in legal fees for the company, adding to the company’s debt and spending, proving once again that management is key within a successful company.

It appears to be the end of the line for the once popular clothing brand, as its immense debt seems far too heavy to get out from under. Fashion is a cut throat business, and while its trendy basics were hot at one time, they have fallen out of favor over time. In 2013, company sales peaked at $633.9 million, though the company experienced a net loss of $106.3 million as margins shrunk. In 2014, net sales were $608.9 million, but there was another net loss of $68.8 million. For the six months ending June 30, 2015, net losses totaled $45.8 million. Of course, these losses are just far too great for a company to withhold and withstand for an elongated period of time.

Ironically enough, we now must wait and see if the Canadian Gildan can make American Apparel great again.

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2 thoughts on “Make American Apparel Great Again”

  • William Scheffield says:

    Gildan? If their T-shirts are any inclination of their business strategy they’ll shrink American Apparel even further!

  • Matt Seifert says:

    Not sure if Gildan will be able to revive the once popular brand. The usual demographic of people that purchase clothing from Gildan don’t seem to match that of American Apparel from what I’ve observed.

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