American Apparel begins layoffs after Canadian company decides not to continue operations
American Apparel is in trouble again. The embattled company has begun to lay off staff, according to a story by Reuters, and will soon let go roughly 2,400 workers in Southern California, where it is based.
American Apparel starts layoffs after Canadian buyer decides not to continue operations
The news comes as Canadian apparel maker Gildan Activewear Inc withdrew its plan to acquire some of American Apparel’s manufacturing operations. Gildan had bought the rights to American Apparel’s brand and some of its equipment for $88m at a bankruptcy auction previously, but it decided that it would not resume operations at its stores or US factories. Though it may decide still to make apparel under the American Apparel name, that is still up in the air.
This spells the end of the fall for the company that started in 1997 and touted itself as making its products proudly in the US. First, the company caught flak for its racy and overtly sexual ads and online photos, which showed scantily clad young women and men. Then, in 2014 founder Dov Charney was forced out by the company’s board after allegations of sexual misconduct. A new CEO, Paula Schneider, was brought in, and she later left amid continuing flagging sales and ongoing problems with creditors and finding a suitable buyer. After she left, the stitching unraveled with a bankruptcy and layoffs.
The controversial Charney continues to try to start another apparel company, which he says will start offline. But American Apparel appears all but gone like a single sock from the wash. Its 110 retail stores will be closed by Gildan, and after two bankruptcies it seems American Apparel is due to go away.