SHARE

The 19-year-old company American Apparel has been bought by Gildan, a Canadian apparel company, for $88 million. Gildan will reportedly pay an extra $15 million to acquire the company’s inventory and purchase orders.

On Thursday, a bankruptcy court in Delaware approved the sale of American Apparel to a Canadian apparel company, Gildan, for $88 million.

Gildan will reportedly also pay an extra $15 million to get a hold of American Apparel’s purchase orders and inventory.

American Apparel’s History

American Apparel’s image had recently plummeted as reports of the company’s labor practices began to surface.

This included employing immigrants with “questionable documents” and worker complaints that were filed to the National Labor Relations board.

However, these complaints were later dismissed.

According to the Wall Street Journal, the company was also slammed with a string of sexual harassment lawsuits against its founder Dov Charney.

Many of these were settled, including over $3 million in court settlements in 2015. According to Los Angeles Superior Court records, by January 2017, there is still one pending lawsuit.

After having a recorded $633 million in sales, with more than 200 stores in over 20 countries, the company started facing huge debts and a large drop in sales.

Charney was ousted by his own board and was blamed for contributing to the company’s downfall due to his costly legal battles.

The company later filed for bankruptcy twice, with around $177 million in debt.

People’s Comments on Why it Failed

According to Mark Cohen, director of retail studies at Columbia Business School: “The story of American Apparel is the best and worst of all things.”

“As brilliant a merchant and marketer as [Charney] was, he was guilty of never having taken seriously enough the need to organize his company efficiently, especially to offset the fact that he was working with domestic manufacturing.”

Charney had said he didn’t think the company would survive without his leadership.

“The company was highly successful. Prior to my ousting, it generated $5 billion in the last 10 years,” he said in an interview on Friday.

“This is a manifestation of Wall Street malfeasance,” he continued, referring to his ousting. “The company got driven into the ground.”

SHARE
Sara O'Connell
A passionate photographer from Arizona, Sara enjoys art and culture.