American Apparel to lay off hundreds

American Apparel to lay off hundreds

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American Apparel started to lay off staff on Monday this week after Canada’s Gildan Activewear withdrew an initial plan to purchase some of the bankrupt fashion retailer’s manufacturing operations.
USA TODAY NETWORK

The dismantling of American Apparel is accelerating, with the retail company laying off roughly 2,400 employees.

American Apparel, a trendy, youth-oriented brand that once boasted about its sporty ensembles being made in the USA, has struggled in recent years with heavy debt and an increasingly competitive and online-oriented retail environment. The job cuts, at its Los Angeles headquarters and a manufacturing hub it owns in nearby South Gate, come two months after it filed for bankruptcy protection.

Last week, Gildan Activewear, a Canada-based clothing manufacturer, got the green light to buy some of American Apparel’s assets for roughly $88 million. The purchase will hand Gildan the global intellectual property rights to the American Apparel brand, as well as some of its manufacturing equipment and inventory.

Gildan however did not agree to buy American Apparel’s 110 stores. Expectations that Gildan might buy some of American Apparel’s manufacturing facilities also fell through.

American Apparel was able to sell its facility in Garden Grove, California to a division of Broncs Inc, which says it will retain the current workforce, a move that will “save over 300 jobs,’’ according to American Apparel spokeswoman Arielle Patrick.

American Apparel stores will also remain open for the next few months. A limited license from Gildan will enable the U.S company to keep its locations operating, along with its website, for 100 days. Gildan will reveal more information on its incorporation of American Apparel when it announces quarterly earnings results in February, says Gildan spokeswoman Geneviève Gosselin.

American Apparel was once a brand as cool as it was controversial, known for its trendy tops and jeans, as well as for its sexually risqué advertising and the alleged transgressions of its founder and one-time CEO Dov Charney. Charney was fired in 2014 in the wake of sexual harassment accusations.

In addition to those allegations, the company was weighed down by hundreds of millions of dollars in debt and it struggled to stay relevant amid fast fashion giants like Zara, and the rapidly growing popularity of Amazon and other online retailers. When the company filed for bankruptcy in November, it was the second time it had taken that step.

American Apparel is not the only once-successful retailer that has faltered. The Limited filed for bankruptcy protection on Tuesday, and has already closed all of its locations. Macy’s announced earlier this month that it would shutter 68 stores, and Sears announced the following day that it would be shuttering 150 locations and selling its signature Craftsman tool brand. Walmart is also cutting hundreds of positions,  though it announced Tuesday that it would be adding 10,000 jobs this year.

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