US fashion retailer American Apparel has filed for bankruptcy for the second time in a year. As business around the world starts to wind down, only one UK store in Camden, London, will stay open in the short term.
Store Closures
The Los Angeles-based brand has announced this week that it will be closing stores and is making its personnel redundant. Over 150 staff in the 12 closed stores have been laid off just after Christmas. And it appears that stores in Japan, Australia, Ireland and Spain are following suit. Gildan Activewear, a Canadian t-shirt brand, bought the rights to the brand for $66 million in November 2016. However, they declined the offer to buy the 230 worldwide stores.
Administrators Appointed
Since the departure of the brand founder, Dov Charney, in 2014, the company has struggled to regain its place in the fashion market. Administrators were appointed by the company recently. According to the joint administrators, Jim Tucker and Richard Beard of KPMG, the 12 UK stores, and other European operations will not be made part of the US sale attempt and will close.
“While the UK business is not part of the US sale, a number of the UK stores are in prime high street locations, and we will also aim to sell individual stores following the Christmas trading peak,” Tucker stated in a pre-Christmas statement.
Lurid Advertising
American Apparel was the brainchild of Dov Charney, in 1989, while still at university. The expansion was fast to more than 200 stores worldwide but was known for its sexy, racy advertising which used young female members of staff. Following a string of sexual allegations, the company’s board fired Charney in 2014.
Made In America
Paula Schneider, Charney’s replacement as CEO, attempted a strategic change in direction for the brand but left the company after just a few months. The company continued to fail in improving the lost quality of the brand, which boasted all its products were made in the US. Fashion retailers Forever 21 and H&M have charged to the forefront of a fiercely competitive industry.
Sales Slumps
American Apparel had been facing strong retail competition in recent years with the financial crisis leaving customers unwilling to pay $30 for a plain t-shirt. And it led to a halt on shipping its products to the UK, due to trading difficulties there. As fashion trends changed, and customers moved to other, less expensive brands, the company experienced a massive slump in sales and incurred mounting debts.
Second Bankruptcy Filing
The parent company filed for bankruptcy first in 2015. After an attempt to turn things around, they exited the court protection early in 2016, but soon hit more problems and filed for Chapter 11 bankruptcy protection again.
At the latest court filing, chief restructuring officer for American Apparel, Mark Weinsten, said, “The Company faced unfavourable market conditions that were more persistent and widespread than the debtors anticipated. These market conditions were particularly detrimental to retailers.” The company recently reported a year-on-year decline of more than 33 percent on sales.
The company is reported to have listed around $215 million in debts, against its 2015 net sales of $497 million.
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Source : http://www.mytotalretail.com/article/american-apparel-closes-most-u-k-stores/
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