American Apparel Leads The Latest List Of Retail Implosions
January 17, 2017
We have been hearing about American Apparel's woes for so long that it is almost a surprise that it took the once innovative chain this long to finally shut down, which it is the process of doing right now.
We have certainly spent plenty of time going on about American Apparel various antics over the years, most recent it has been about the removal of its controversial founder and former CEO Dov Charney whose removal in 2014 shined a light on the company's worst attributes behind the scenes including not only his highly questionable work behavior and the environment it created, but, more importantly, his mismanagement of the retail chain which had grown larger than he was able successfully steward. It was an ugly fight and —long and complicated story short— he lost. New, more experienced management arrived, but the damage was more than they were able to repair, and after AA's most recent bankruptcy last year, the company's intellectual property and some of its equipment was sold for a mere $88 million to the Canadian company Gildan Activewear which was not interested in continuing to operate the chain of retail stores that in more optimistic days threatened to overrun New York City. While many American Apparel stores have already been closed through ongoing reorganization efforts, the rest will be gone in a few months. More upsettingly, Charney's pride and joy, his Los Angeles factory at which much of the company's products were made has been shut down. Workers spent Monday this week in lines at the facility to pick up their final paychecks. Monday's layoffs came to about 2,400 workers. No severance and likely more layoffs to come.
American Apparel joins a group of retailers who have seen a sad New Year including the final shutdown of the once dominant women's apparel chain The Limited and the announcement of major store closures from iconic American chains Sears and Macy's. Each of these companies have long been suffering from their own systemic problems, so it may be premature to announce a crisis for the retail industry in general, but the loss of 100 Macy's units alone is going to be a jolt to retail landlords who now have to either redevelop the spaces or attract a shrinking pool of large stores to try and fill all those square feet —not to mention finding new tenants for the newly or soon-to-be empty Limited and American Apparel spaces that dot shopping areas across the country.