American Apparel plans store closures, layoffs for growth

American Apparel has announced the next phase of its strategic turnaround plan, including a redesigned fall merchandise line, approximately 30 million dollars in cost-cutting initiatives, and key additions to its leadership team. Cost-cutting measures will include closing underperforming retail locations and streamlining of its workforce to reflect a smaller store footprint and general industry conditions.

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

“We are committed to turning this company around. Today's announcements are necessary steps to help American Apparel adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employees, and return the business to long-term profitability,” said Paula Schneider, recently appointed Chief Executive Officer of American Apparel.

American Apparel plans store closures

The company has announced the hiring of 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. Olcu will lead the company's current retail country managers in optimizing merchandizing and sales at American Apparel's store locations. She has a strong background in building retail businesses of various sizes, having held senior leadership roles at companies including Express, Mexx Canada Company, Indigo Books, Music, and Club Monaco. Long-time valued manager Nicole Gabbay will remain in her current position as President of US Retail.

Gebhard will serve as President of Wholesale, focusing on increasing the company's imprintable and business-to-business sales. He will also oversee Oak, a New York-based specialty retailer the company acquired in 2013. Gebhard has served as a consultant to American Apparel for the past four months and already has a deep understanding of its business and processes. He has held senior leadership, operational, and branding roles at apparel companies, including Nike, Speedo USA, Columbia Sportswear, and Adidas.

The company will also unveil a new fall line focused on advanced basics and key items in both men's and women's. "Historically, the fall season has not been a major focus for the Company. We are beginning the process of re-merchandising the product assortment in our retail stores to increase productivity by SKU," added Schneider.