The Rise and Fall of American Apparel: A Cautionary Tale for Retailers ????

Introduction

Hey, corporate professionals! Remember American Apparel, the brand that was once the epitome of made-in-L.A. hipster cool? Let's dive into the rollercoaster journey of this once-iconic brand and what led to its downfall. ?????

The Charismatic Founder: Dov Charney ????

Visionary or Villain? ??

Dov Charney was a visionary in many ways, advocating for made-in-the-USA products and social issues. However, allegations of sexual harassment and misuse of company funds led to his ousting in 2014.

The Business Model ??

Charney's commitment to manufacturing in the U.S. and paying workers a proper wage set the brand apart. But it also led to high operating costs that the company couldn't sustain.

Financial Struggles and Mismanagement ????

The CFO Carousel ??

Frequent changes in the CFO position eroded investor trust and led to financial instability. The last time the company turned a profit was in 2009.

Cotton Crisis ??

Rising cotton prices between 2010 and 2011 further strained the company's finances, forcing them to raise prices on some products.

The Legal and Ethical Quagmire ????

Immigration Woes ??

A federal investigation in 2009 led to the firing of over 1,500 experienced manufacturing employees, impacting the company's productivity and operating income.

Sexual Harassment Allegations ??

Charney's controversial behavior and multiple allegations against him tarnished the brand's image and led to legal battles.

The Aftermath: Bankruptcy and Beyond ????

Chapter 11, Twice ??

American Apparel filed for bankruptcy twice, in 2015 and 2016, and was eventually acquired by Canadian company Gildan Activewear in 2017 for $88 million.

The Brand Today ??

While the brand still exists online, its commitment to U.S. manufacturing and its original vision have been diluted.