Over the past year, American Apparel has faced a slew of brand and financial struggles. Now, the clothing manufacturer and retailer has revealed new details on a strategic turnaround plan designed to help the company bounce back.
American Apparel is embarking on a series of cost-cutting initiatives to save a total of $30 million over the next 18 months. This will undoubtedly be a daunting task; the company recently shared in a press release that despite its efforts to increase revenue and cut costs, “there can be no guarantee that the company will have sufficient financing commitments to meet funding requirements for the next 12 months without raising additional capital.” There also is no guarantee that American Apparel will successfully raise the capital required.
In the summer of 2014, the Board of American Apparel forced Founder and longtime CEO Dov Charney to step down from his position, despite reservations from 30 company executives. Charney helped establish the brand and its controversial marketing strategies, but with his own history of brand-damaging antics and a series of lawsuits, he arguably was doing more harm to the business than good.
Armed with a new executive team, including CEO Paula Schneider and CIO Brian McHale, American Apparel is fighting to improve its overall financial health. The brand is closing underperforming retail locations and streamlining its workforce to align with smaller store footprints and general industry conditions. In combination with these closures, American Apparel is assessing the viability of opening new stores in more profitable, fast-growing territories.
The American Apparel management team also is addressing a slew of legacy issues including: Improving SKU mix; rationalizing the real estate portfolio; strengthening creative marketing; maximizing new retail, e-Commerce and wholesale opportunities; increasing supply chain agility; and improving expense management.
“We are committed to turning this company around,” Schneider said. “Our primary focus is on improving the processes and product mix that have led to steep losses over the past five years. Our customers, employees and local communities around the world believe that American Apparel is an iconic brand that deserves to succeed. My job is to make that a reality.”
The current American Apparel management team also is tasked with defending the company against approximately 20 lawsuits and administrative actions initiated by Charney and his associates. The company has called these suits “meritless.”
New Executive Appointments, Product Assortments Poise American Apparel For Rebound
To make its turnaround plan a reality, American Apparel has hired Christine Olcu as General Manager of Global Retail and Brad Gebhard as President of Wholesale.
In her new position, Olcu will lead the company’s retail managers in optimizing merchandising and sales at all locations, while improving overall store productivity. She has held senior leadership roles at Club Monaco, EXPRESS and Indigo Books, Music, Inc.
As President of Wholesale, Gebhard will focus on increasing American Apparel’s business-to-business sales. He also will oversee Oak, a New York-based specialty retailer that the company acquired in 2013. Throughout his career, Gebhard has held senior leadership, operational and branding roles at Adidas, Columbia Sportswear, Nike, Speedo USA and more.
American Apparel also is unveiling a redesigned merchandise line to remain relevant with young consumers. The fall line is comprised of advanced basics and key items for men and women.
“Historically, the fall season has not been a major focus for the company,” Schneider said. “We are beginning the process of re-merchandising the product assortment in our retail stores to increase productivity by SKU. The new styles are designed to increase revenue as we continue to evolve our product offering during this important selling season.”