Downtown Los Angeles-based American Apparel Inc. announced today it will cut jobs and close stores as part of a restructuring plan to cut cuts by about $30 million over the next 18 months.
But recently appointed CEO Paula Schneider warned that even with the restructuring, the company may not be able to meet funding requirements in the next 12 months unless additional capital can be raised. “We are committed to turning this company around. Today’s announcements are necessary steps to help American Apparel adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employees, and return the business to long-term profitability,” she said.
“Our primary focus is on improving the processes and product mix that have led to steep losses over the past five years,” Schneider said. “Going forward, the company will look to add new stores in profitable fast-growing territories while reducing its footprint in unprofitable and over-saturated markets.”
The company, which is defending American Apparel against about 20 lawsuits and administrative actions initiated by ousted founder and ex-CEO Dov Charney and his associates, did not disclose how many jobs will be cut or the number of stores to be closed.
As of March 31, the company operated 239 retail stores in 20 countries; an e-commerce site that serves customers in 50-plus countries; and a wholesale business that supplies T-shirts and other casual wear to distributors and screen printers.
