Following years of debt problems, legal battles and various inventory issues, American Apparel Inc. has a new owner — and with it, a fresh start. On Monday, Gildan Activewear Inc. paid $88 million to win the auction for the struggling Los Angeles-based retailer, having to increase its initial stalking horse bid of $66 million by $22 million. This boost may have been due to a bidding war that reportedly emerged last week between retail groups Amazon and Forever 21; bids for the auction were due on Friday. However, the sale won't be official until it's approved by a bankruptcy court judge in Delaware, which could happen as early as Thursday.
In a release published on Tuesday, Gildan spelled out the specifics of the acquisition, which mainly includes American Apparel's intellectual property business. However, Gildan will also "separately purchase inventory from American Apparel to ensure a seamless supply of goods" to its printwear market — meaning you can bet that any custom design ordered via Gildan will be printed on an American Apparel product.
Additionally, WWD reports that the Canadian company, known for its basic, undecorated T-shirts, socks and underwear (and for being the preferred T-shirt brand for Kanye West's "Pablo" merch), is expected to keep a number of American Apparel's manufacturing, distribution and warehouse operations in the Los Angeles area. Gildan will not be purchasing any retail store assets.
Glenn Chamandy, Gildan's president and CEO, said in a statement:
"We are excited to be moving forward with this acquisition. The American Apparel brand will be a strong complementary addition to our growing brand portfolio. We see strong potential to grow American Apparel sales by leveraging our extensive printwear distribution networks in North America and internationally to drive further market share penetration in the fashion basics segment of these markets."
Beyond catering to Gildan's printwear business, it's not yet clear how, exactly, the company plans to utilize the American Apparel brand name. But we can be sure that, at this point, there's no where for American Apparel to go but up.