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.
The ailing retailer said Thursday that it had reached a deal to sell the tools brand to Stanley Black & Decker for a net present value of about $900 million, including future royalty payments.
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Online retail is continuing to drive physical stores out of business, with planned closings from brands such as Macy’s and Sears.
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Macy’s will close 35 to 40 underperforming stores, around 5% of its total locations in 2017.
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In a sign of how dramatically the landscape is changing when it comes to shopping, experts say don’t expect any let up in store closings in 2017 just because retailers just had biggest growth in holiday sales in five years.
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The iconic Carnegie Deli in New York City will slice its last mountainous pastrami sandwich on Friday. (Dec. 29)
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After sales declined for the 15th straight quarter, Abercrombie & Fitch has decided to close more stores.
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Less than three months after filing for bankruptcy, the sporting goods store Sports Authority announced that it is closing.
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Trying to cut its way to profitability, troubled Sears Holdings announced Thursday that it will close 68 Kmart and 10 Sears stores this summer.
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With its stock down almost 50 percent since 2014, the legendary brand is taking a page from its younger competitors.Video provided by Newsy
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FAO Schwarz, the iconic New York City toy store, closed its doors Wednesday after nearly 30 years on Fifth Avenue. Toys “R” Us announced they were closing the location due to rising rental costs.
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After it struck a rent deal with several mall owners
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Wal-Mart is pulling the plug on their smallest store format. In total, the company announced that 269 store locations will be closed starting next month. Though most of the store locations are in the United States, a bulk of the store closures wil
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Sears seeks to stem bleeding: closes more stores, sells Craftsman brand
Big name stores are closing across America
Macy’s to close up to 40 stores
Expect more store closings despite big holiday sales
Famed NYC Carnegie Deli closing
Abercrombie & Fitch is planning to close more stores
Sports Authority is closing
Sears and Kmart to close stores
Ralph Lauren closing stores, cutting jobs to save money
FAO Schwarz closes iconic Fifth Avenue NYC location
Aeropostale will be able to keep 400 stores open
Wal-Mart pulls plug on underperforming stores
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