News, Retail, The Business
American Apparel is $120 Million in Debt and Might Actually Have to File for Bankruptcy
By Lauren Sherman
It’s looking more and more dire for American Apparel.
In the company’s most recent financial statement, released today, AA remarks that it “may not have sufficient liquidity necessary to sustain operations for the next twelve months.”
Eek. There are plenty of reasons as to why this is happening. As we’ve reported in the past, the company is heavily in debt–$120 million. It owes one lender–Lion Capital–over $80 million. What’s more, same store sales over the last quarter were down by 16%.
AA says it’s trying to work something out with Lion Capital. The retailer has also switched auditors, since its last auditor resigned. (Usually, if a company is really screwed, the auditor will just resign instead of reporting that it’s screwed.)
Here’s what it comes down to: Dov Charney started with an awesome concept but expanded too rapidly. Charney also let his controversial “work policies” hinder the brilliance of his brand. (When you own a public company, you’re not only answering to your customers and your employees, but also to shareholders. You have to live and work by a different set of much stricter rules.)
Will AA really close for good? I still find this highly unlikely. If Charney and co. are forced to file for bankruptcy protection, someone will swoop in and save them. (Maybe Ron Burkle, who now owns 6% of the company?) It will probably mean less American Apparel stores, but honestly, they’ve become as ubiquitous as Starbucks in New York. I admittedly like to shop at American Apparel, but do I need two of them within walking distance of my apartment? Not really.
Tags: American Apparel
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I work for the company and I find it sad we haven’t really been filled in on anything going on. We are told to not ask questions and not give answers regarding this matter. I find out more online than I do from any of my higher ups.
I work for the company and I find it sad we haven’t really been filled in on anything going on. We are told to not ask questions and not give answers regarding this matter. I find out more online than I do from any of my higher ups.
I know someone who uses them as their main tee supplier right now. This is terrible
So sorry to hear this! I’ll be glad when things get better.
A great great many independent artists and promotion companies use AA products for printings. Wholesale catalogue sales were the beginnings of the brand. It would be a raw deal for a lot of people if they closed.
I am a little excited at the possibility of someone swooping in and magically fixing all the flaws detracting from this brand I love. On a recent trip, I tried on about 12 individual pairs of their new-ish men’s dress pants. There’s about 4 different styles, all nearly identical, in 3-6 colorways each. I only tried on one size, yet each fit completely differently. Too big, too small, way too small. It was like Goldilocks and the 12 pairs of bullshit pants.
They should streamline the amount of products they make, so many are superfluous, and pay attention to making what remains a consistent product.
does this mean i can buy the tri-blends at 5 bucks each yet?
Step One: Fire Dov. He can go carry camera equipment for Terry Richardson or something.
I’ve known about this for over a year, we got wind of it, b/c the company I worked for was one of their largest customers (it was also obvious by their poor delivery performance to us as a customer). The retail chain was so obnoxiously over-saturated (which is the real reason this is probably happening, they should have just stuck with the demand side, and left the retail market alone….), along with the economy, it made for a bad scenario. I like their products, and support them 100%. Charney was a great visionary, but not all great visionaries make great CEO’s, as stated in this article. I would say not fire Dov, but put him in the marketing (just make sure all of his staff are dudes…), and let someone else worry about operations.
He just doesn’t have what it takes to run a listed company. All his appalling hijinks have done nothing but drag the brand down. They need someone with a serious business head who doesn’t appear in scandal rags.
agreeing with bongenre, their consistency is shit. not to mention for the quality their pricing is atrocious. why pay that much when its only going to shrink like a mf’r and fall apart at the poorly serged seams?
i would buy so much shit there if their prices reflected the quality.
good riddance!
not surprised. their clothing is so overpriced. I only buy their stuff if it’s on wholesale.