Fashion

American Apparel To Close Stores and Lay Off Workers

No word on how many shops will be shuttered or the number of jobs in peril

American Apparel to Lay Off Workers, Close Stores

American Apparel announced on Monday that it will close stores and lay off employees as it tries to cut costs and turn around its fortunes following a turbulent era.

The cuts will save a total of $30 million, the company said, though it did not say how many shops or jobs will be affected. American Apparel has a fleet of 239 retail locations and a total workforce of around 10,000. 

"We are committed to turning this company around," Paula Schneider, chief executive of American Apparel, said in a statement. "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."

The company also warned that despite the cost-cutting measures, it may still need to raise additional capital in the next twelve months. 

In April, American Apparel laid off about 180 employees, primarily in manufacturing, in what Schneider called an "ongoing process" to reassess its personnel.

Schneider said her focus is to remedy problems that caused "steep losses" over the past five years. In that time, American Apparel has suffered more than $300 million in losses, largely under founder and former CEO Dov Charney, who was forced out by the board of directors in 2014. The retailer remains embroiled in a nasty legal spat with its spurned founder, with lawsuits filed by both sides.

Schneider has made numerous changes to American Apparel since taking the reins in January, including revamping its edgy and oft-maligned marketing strategy, remaking the organization's management structure, and bringing in more stringent forecasting and budgeting processes.

This fall, American Apparel will launch a redesigned clothing line "focused on advanced basics" in an effort to lure shoppers back to the embattled brand. "The new styles are designed to increase revenue as we continue to evolve our product offering during this important selling season," said Schneider.

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