It has not been a good few years for American Apparel, and today the bad news continue to roll in as the company has announced it has filed for Chapter 11 bankruptcy. The bankruptcy is looked at as a conclusion to a year with full of controversy from all angles.
The CEO and founder of the company Dov Charney, was accused of misusing the company’s finance and moving the company in the wrong direction. Those accusations soon after faded off the radar, but Charney could not get away from another accusation which was more serious and had to do with a female employee.
Charney was the target of several lawsuits alleging several harassment complains for what accusers described as his inappropriate behavior in the office. The company’s board agreed to fire Charney in efforts of keeping the company alive. He still owns more than 5% of the company, according to American Apparel's bankruptcy petition.The company new that they had a long road ahead of them in order to reach back to financial stability but they are confident that things will work out. They believe that the bankruptcy will help to deal with all the lawsuits the company has from the last two years.
American Apparel's new CEO, Paula Schneider, had charted a strategic path to rehab the company's image through a mix of new marketing, products and store design.
"This restructuring will enable American Apparel to become a stronger, more vibrant company," Schneider said Monday in a statement. "By improving our financial footing, we will be able to refocus our business efforts on the execution of our turnaround strategy as we look to create new and relevant products, launch new design and merchandising initiatives, invest in new stores, grow our e-commerce business, and create captivating new marketing campaigns that will help drive our business forward."
Many analyst believe that the company won’t sustain a constant revenue flow because the competition has been gaining traction over the last six quarters. American Apparel made its name due to the fact of their clothes being made in the United States thus the reason for their clothes being more expensive than its competitors.
Unfortunately for those rivals like H&M and Forever 21 have gained in popularity because the general public would not want to spend the extra money for an “everyday” outfit.
Only time will tell whether this company can rise from the ashes or be gone with the wind.