American Apparel, once the USA’s largest clothing factory was filed for bankruptcy back in 2015, but is still in operation awaiting a buyer. Fashion industry insiders say the companies losses in recent years are well over $300m a year, with interest on loans alone topping $40m per year.
The troubles for the fashion giant started in 2014 when the CEO and founder, Dov Charney, was asked to take a back seat and eventually left the company altogether. Even with established and successful California apparel executive Paula Schneider installed as the new CEO, in 2015, no easy solution could be found to the company’s problems. Debts were swapped for shares and a new board swept in promising the company would be in the black again by 2018. This however is looking extremely unlikely.
Schneider soon left the sinking ship for another company and more recently a Canadian firm, Gildan Activewear has apparently bought the intellectual property rights to the brand name, along with a portion of American Apparel’s wholesale section. Gildan have stated they are not interested in buying the company’s 100 US wides shops, leaving over 3500 employees in the LA area with a bleak future unless a buyer for this part of American Apparel is found urgently.
American Apparel is a legendary fashion store and it would be a great shame to see it disappear for good. Once again the might of garment manufacturers based in Asia are proving too tough for their US based competition.