American Apparel May Not Be Able to Stay Afloat

Even with their recently announced store closures and layoffs, this retailer may not be able to stay afloat.

Earlier, we reported that American Apparel would be closing stores and laying off staff in an attempt to fight a decline in sales. So far, it is unknown how many locations will close and how many staff will be let go, but the move is expected to save the company about $30-million in costs.

American Apparel, which is best known for their Made-in-Los Angeles apparel and scandalous ex-CEO and founder, currently has 239 stores in about 20 countries, with 30 stores in Canada and 135 in the United States. We will see the closures of underperforming stores over the next 18-months as the company reduces their footprint in over-saturated markets.

However, even with the closures and massive cost cutting, American Apparel may not be able to stay afloat. “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,” the company said in a release.

American Apparel’s recently appointed CEO, Paula Schneider, still has high hopes in turning the company around stating that she is committed to turning the company around and that “American Apparel is an iconic brand that deserves to succeed.”

American Apparel now joins the growing list of retailers closing locations in North America, a list that includes global companies such as the Gap, GUESS, and more.

What do you think about American Apparel’s future? Will they be able to stay afloat?

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