American Apparel, once the T-shirt brand of choice for fashion editors, downtown hipsters and indie rock frontmen, is currently facing bankruptcy after defaulting on important loan payments to investors, and has announced that it is unable to comply with the U.S SEC’s quarterly report deadline following the resignation of the company’s auditor, Deloitte & Touche, whose audit report released earlier this year has provoked an investigation by a law firm acting on behalf of the company’s shareholders. This news has sent American Apparel’s shares' plummeting, forcing the company to can 1500 employees at its Los Angeles manufacturing facilities and slash its advertising budget by 40%, and the New York Stock Exchange to announce a potential delisting of the company’s shares. In short: If American Apparel was a bungalow you’d never get a mortgage on it.
But how did a successful, fashionable brand whose affordable range of colourful cotton jersey basics which should present a retail no-brainer in the current financial climate, and who prides itself on its ethical manufacturing initiatives, fall from Joe Public and the Fash Pack’s grace so swiftly?
Reports of the company’s current financial woes certainly seem to contain a whole lotta schadenfreude. Pointed fingers have been made at American Apparel’s seemingly bizarre management and human resources policy, as well as the company’s CEO and founder, Dov Charney, who has recently claimed that the company’s traditional demographic, the “hipster”, is dead and that American Apparel will now be offering classic preppy pieces to so-called “Echo Boomers” – the children of grown-up Generation X grunge kids.
This statement, which smacks of Gerald Ratner’s infamous “total crap” gaff, suggests that American Apparel is attempting to distance itself from an already-dwindling customer base, and the company’s latest advertising seems a million miles away from the highly-eroticised images of teenage girls featured in previous campaigns. These attempts to erase American Apparel’s sexually provocative reputation seems to reveal desperate backpedalling from an organisation allegedly headed by a reported serial harasser (Charney has been unsuccessfully taken to court four times for sexual harassment), and which is reported to ruthlessly police its female employees’ wardrobe, makeup, nail, and hair colour choices.
Many people may refer to the cost of American Apparel producing even its most basic items in a myriad of colourways, as well its aggressive expansion programme, as potential reasons for the company’s current predicament. Personally, when visiting an American Apparel store, I have found the merchandising of the product overwhelming, the packaging underwhelming, the staff seemingly unable to offer advice on sizing or even basic customer service, and a product which should, on paper, be attuned to the new minimal mood currently sweeping fashion but which in reality rather resembles a tawdry table dancer’s cast-offs. This is before we even mention the sheer men’s tees.
American Apparel’s vertically-integrated supply structure should ensure a steady stream of fresh product, fashion at its fastest, allowing the retailer to adapt to the vagaries of its customers, yet the goods on sale are mired in trends which were emerging at the chain’s inception. Not a hot look for a brand whose raison d’etre actually is “fashionable basics” and signals either a design and buying team in crisis, suffering from tunnel vision or a company working within prohibitive manufacturing volumes.
Ironicially, a statement by Goldman Sachs declaring “jeggings”, a hybrid of jeans and leggings favoured by American Apparel’s core clientele, as a key trend for this Autumn and Winter may well be one of the final nails in the company’s coffin as fashionable shoppers continue to desert the store in droves, and it will take a lot more than an attempted repositioning to reverse the company’s currently sliding month-on-month sales.
Business analysts are claiming that the only way for American Apparel to survive is if CEO Charney falls on his sword. This appears unlikely, but you can bet your floral lace unitard on us keeping our eyes peeled for American Apparel’s eventual fate over the coming weeks and months.
This article was researched, compiled and written by Lee Clatworthy in association with Katie Chutzpah.
Are you a fan of American Apparel? What do you think of the brand's reputation and current woes? Please feel free to comment in the box below or in the 'shout mix' comment box opposite.
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