Having already cut advertising costs and factory workers' hours in an effort to stem expenses, American Apparel is now undergoing a round of layoffs that will eliminate roughly 180 jobs, largely in manufacturing. While legal fees associated with Dov Charney's investigation have cost the company multiple millions of dollars recently, sales have also fallen by $25 million in the last year.
“We are disappointed that we had to make this very difficult decision, however, this is a turnaround," CEO Paula Schneider said in a statement to Fashionista. "This change is meant to restore the financial health of American Apparel, which under previous management, saw losses of more than $300 million over the past five years. This is a very sad day. It is very challenging to go down this route, but we have to conduct business differently in order to thrive.”
According to American Apparel's website, its Los Angeles factories employ over 6,500 people in sewing, shipping, cutting and dyeing. Early last month, the brand incited complaints from an immigration advocacy group called the Hermandad Mexicana when it reduced workers' hours, an adjustment that a rep for the company said was something it did routinely to meet demand.
It's unclear if the layoffs will stop here. The company still has a long way to go to fix its finances.