The retail industry is focused on American Apparel once again this week, but it's not because of the chain's risqué ads or questionable employee dress codes. This time it's pure business as the company's stock plummets after reports of missed debt payments, SEC inquiries and subpoena's from the U.S. Attorney Office for the Southern District of New York. Among other woes, the company's auditing firm, Deloitte & Touche has resigned which delayed its ability o properly report its business. It's California factories were hit when the brand was forced to terminate over 1,500 workers over lack of documentation, thus hindering its ability to quickly respond to market trends.
Put simply, the company has been in chaos all year, and WWD points to CEO Dov Charney's lack of management skills and running the company "as a perennial start-up" as its main problem.
We doubt that American Apparel is ready to totally collapse, but it's now a safe bet that the 279-store chain is in for some major restructuring, and possibly a reduced role for the overwhelmed Charney.