American Apparel going through difficult times

Bad news of major brands having to close stores and/or lay off employees are becoming quite common these days. After The Gap announced last month the closure of more than 150 stores, American Apparel just made a similar statement. In order to "return the business to long-term profitability", the Los Angeles based clothing manufacturer has to make deep cuts to save... $30 million. American Apparel hasn't given any further precision on how many stores and people will be affected by this drastic plan, but the company intends to gradually reverse the situation within the next 18 months. American Apparel counts more than 10,000 employees and 260 locations worldwide. And over the last five years, the clothing brand faced more than $300 million of sales losses.

Dov Charney, its founder and CEO, was fired last December and does not especially remains in good terms with the board of directors. Paula Schneider, former fashion executive, was promoted in January and has already made a few welcomed changes, including in the marketing strategy and the management structure. Still, Schneider is objective about the situation and if she's doing her best, she doesn't make any promises: "Even if American Apparel increases revenue and cuts costs, there can be no guarantee that the company will have sufficient financing commitments to meet funding requirements for the next twelve months without raising additional capital, and there can be no guarantee that it will be able to raise such additional capital".

*Photo: Beyond My Ken