I remember when American Apparel became the go to provider for t-shirts for anyone who was doing screen printing for bands. Their t-shirts ran true to size, better than Hanes, and were affordable in bulk. As punk bands with budgets became a more style conscious, American Apparel was a great choice.
A few years later, American Apparel translated the wholesale success into one of the strongest fashion/retail bands of the later part of this decade. But now, they face a litany of problems that threaten to doom the retailer. The Gaurdian’s has an excellent piece, The rise and fall of American Apparel, detailing all of the problems facing the retailer today, from debt to lawsuits to immigration problems. This is a story that I think will serve as the outline for the business class that will be taught about American Apparel one day.
The fashion empire of this maverick Canadian entrepreneur – who apparently relishes his reputation as a pervert and a libertine – has gone from being the coolest company on the block when it arrived in Britain in 2004 to the brink of bankruptcy because its auditor, Deloitte & Touche, resigned last month after discovering “material weaknesses” in the financial controls of the clothing company dating back to last year.
For the exhibitionist Charney, whose excesses are the stuff of fashion-industry legend, to be finally humbled by accounts that are more street corner than Wall Street is, some might think, a bit like Al Capone finally being brought to book over tax evasion. But whatever the catalyst, it has led to the unravelling of an empire. It is a rags to riches – and back to rags again – story that has the fashion world in its thrall.
Americal Apparel has become a well known brand in both retail and fashion, but it is looking like their downfall is going to be their own success. After unveiling their first two stores in 2003, they launched one of the most aggressive retail expansion plans of the previous decade. Doing so has coupled the retailer with debt at a time when the industry is struggling. Add in seemingly unstable leadership and it is difficult to say what the future holds for the retailer.
I do wonder what the future holds for retail operations but I do hope that the wholesale operations can find a way to continue, in spite of whatever happens to the company. They really do make a great product.
