The popular clothing apparel brand American Apparel aims to lay off 500 workers from its Southern California branch in a few months. The American clothing manufacturer has been running into some dire problems for a few years now. The company encountered its first scandal when the then CEO was mired in a sex scandal wherein he was accused of making inappropriate sexual advances towards fellow employees. The brand tried to revamp itself by bringing in a new CEO, but not much has worked out as the company began to undergo rough patches with their business model.
The profit margins and revenue streams were unable to deliver to the company’s benefit which is why the company has decided to let go of 500 workers from the company as a cost-cutting measure. American Apparel has been a very successful brand for the better part of last decade, however, the brand that markets itself as new age, with its chic and sexy advertising image for the middle class, has failed to impress. Adding to the company’s woes are the competitive middle-income brands like GAP and Zara which has raked in great profits, making the apparel market a very hostile place for American Apparel to exist.
Additionally, the company underwent an organization restructuring that did not work out too well for the company either. The company restructuring was aimed at a higher rate of profitability which worked contradictory to its motives. The company has its branches in various parts of the United States of America and has several outlets of its brands and stores across the globe. However, this has still not been able to garner a positive response from any revenue streams, and the company has reported unfavorable sales figures.
Missing the ride
Additionally, the company was not very successful as the organization was not able to align its growth rate in sync with the American economy growth rate. Since the past year, the American economy has been booming, but the company has been facing massive challenges. Retail expenditure and consumer spending have grown nearly three times the rate since the past decade, however, American Apparel had just missed the ride by a year. Ever since the scandal that the company faced, public confidence in the product has been drastically reducing. The focus of the layoffs will be in Southern California itself.