American Apparel ready to relaunch

NEW YORK • As the winds of change continue to rock the foundations of many fashion brands, one iconic label that lost its way is hoping to catch a second wind in its sails under new owner Gildan Activewear.

Since buying Los Angeles brand American Apparel at a bankruptcy auction earlier this year, the Canadian maker of T-shirts and underwear has rebuilt inventory and ramped up shipments to wholesalers.

It is now preparing to relaunch the e-commerce website, while also aiming to boost exports and explore retail opportunities.

"At the end of the day, we will do very well with this brand," Gildan chief executive Glenn Chamandy said during a recent conference call.

Get The Straits Times
newsletters in your inbox

"This will hopefully be one of the best acquisitions the company has made, in terms of return on investment, so we're very excited about it."

Gildan bought the brand for US$88 million (S$120 million), but not the 110 retail stores which were shut down.

American Apparel was once a high-flying retailer that peaked at more than US$600 million in sales. But the high cost of making clothes in Los Angeles was a big factor in its downfall, even as demand dried up for its spandex miniskirts and electric-blue leggings.

The revamped website will open in the next two weeks and carry a wide range of products, including jeans, to conform with some of American Apparel's historic offerings, Mr Chamandy said.

Gildan hung onto a handful of the defunct company's marketing and advertising employees and has set money aside to "re-energise" the brand, he added.

Montreal-based Gildan has built a global production chain, from yarnspinning to clothes-stitching, that enables it to lower costs and compete with Hanesbrands and Berkshire Hathaway's Fruit of the Loom.

It is now using that capacity to produce American Apparel clothes abroad for price-conscious wholesalers, while working with a thirdparty manufacturer in the United States to cater to consumers partial to made-in-the-US apparel.

Mr Chamandy did not say if the new website would give consumers the option to choose the cheaper, foreign-made products or pay a premium for goods made in the US.

The company is already boosting overall revenue by selling blank American Apparel basics to wholesalers who customise the items.

That segment of the screen-printing business is the most lucrative and Gildan predicts that American Apparel will contribute to higher margins.

The acquisition should boost sales by US$50 million to US$75 million this year, Gildan has said.

The company had revenue of US$2.6 billion last year.

"We're going to continue to focus on our distribution. We're going to focus on our direct to consumer. We're going to expand internationally," Mr Chamandy said about next year's plans.

American Apparel founder Dov Charney - whose track record has been soiled by allegations of sexual misconduct with staff - has since created a new, if much smaller, rival company called Los Angeles Apparel, which launched last year as a wholesale business.

Mr Chamandy does not seem too worried about the competition.

"Good luck to him," he said. "But at the end of the day, we're wellpositioned. We have a significant investment and capital able to support our brand."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on August 10, 2017, with the headline 'American Apparel ready to relaunch'. Print Edition | Subscribe