If there's one brand that encompasses the recent trials and tribulations facing retail today, it's American Apparel. After facing years of debt problems, the unceremonious departure of its founder (and the ensuing legal battle), and various issues with product and store traffic, the company has kept kicking despite all odds. After emerging from Chapter 11 bankruptcy last winter, the struggling retailer began exploring a sale in August followed by reports in October that it would soon be filing for a second bankruptcy. And now, in November, it looks like a buyer has been found.
Montreal-based Gildan Activewear Inc. announced on Monday that it had entered into a deal with American Apparel to buy its intellectual property business for $66 million. As a result, the retailer's board of directors voted on Sunday to once again voluntarily file for Chapter 11 bankruptcy protection. As Gildan notes in a release, the bankruptcy court may require AA to auction off its assets and business, in which case Gildan would put in the initial bid and presumably be selected as the successful bidder.
In a release, Gildan noted that American Apparel will be a "strong complementary addition" to its portfolio of brands, which mainly includes sock and hosiery manufacturers like Gold Toe, Peds Legwear and Silks, among others. "The American Apparel brand is a highly recognized brand among consumers and within the North American printwear channel," noted the release. "The acquisition will create revenue growth opportunities by leveraging Gildan's extensive distribution network in North American and international printwear markets to further increase the brand's penetration in the faster growing fashion basics segments of these markets." Gildan will not be purchasing any retail store assets.
Similar to American Apparel, Gildan's product assortment is largely comprised of basic, undecorated clothing such as T-shirts, sport shirts, fleeces, socks and underwear. The brand posted revenue of $1.95 billion in 2015, as well as a net income of $304.9 million.
A spokesperson from American Apparel did not immediately respond to our request for comment, but we will update this story as we learn more.