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American Apparel initiates new phase of turnaround plan

07 Jul '15
3 min read

In order to shore up its topline and bottomline, clothing retailer American Apparel has announced the next phase of its strategic turnaround plan.

“This plan includes a redesigned fall merchandise line, approximately $30 million in cost-cutting initiatives, and key additions to its leadership team,” a press release from the retailer informed.

For the first time in the Company's history, later this year, American Apparel will unveil a new fall line focused on advanced basics and key items in both men's and women's.

In addition, the Company is undertaking a series of cost reduction initiatives to better align its cost structure with the headwinds of highly competitive, promotional retail environment and volatile foreign exchange markets.

These initiatives are expected to reduce operating expenses by approximately $30 million over the next 18 months.

Among other initiatives, cost-cutting measures will include closing underperforming retail locations to drive productivity improvements.

In connection with these store closures, the apparel retailer will streamline its workforce to reflect a smaller store footprint and general industry conditions.

Going forward, American Apparel will look to add new stores in profitable fast-growing territories while reducing its footprint in unprofitable and over-saturated markets.

These initiatives, some of which will begin immediately, are aimed at stabilising it financially by maximising retail store performance and revamping the product merchandise assortment.

According to American Apparel, even if it increases revenue and cuts costs, there can be no guarantee that it will have sufficient financing commitments to meet funding requirements for the next twelve months.

“To do this, we might need to raise additional capital, and there can be no guarantee that we will be able to raise such additional capital,” it said.

“These are necessary steps to help us adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employees, and return the business to profitability,” CEO Paula Schneider said.

“Our primary focus is on improving the processes and product mix that have led to steep losses over the past five years," she too added.

"Our customers, employees and local communities believe that American Apparel is an iconic brand that deserves to succeed and my job is to make that a reality," the newly appointed CEO observed.

The retailer also named Christine Olcu as general manager of Global Retail and Brad Gebhard as president of Wholesale to help execute its global retail and wholesale turnaround strategies.

American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion-basic apparel and operates 239 retail stores in 20 countries including the US and Canada. (AR)

Fibre2Fashion News Desk - India

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