Online retail giant Amazon is making moves to acquire the Los Angeles-based American Apparel, which popularized the branding theme “Made in the U.S.A.”. American Apparel has filed for bankruptcy and is now weighing its options between Amazon, and other notable companies such as Forever21, Gildan Activewear Inc, and even its brand licensor, Authentic Brands Group LLC.
The holiday winner Amazon whose shipment were up by more than 50 percent is looking to expand its physical stores by opening an interest in acquiring American Apparel. Reports revealed that the acquisition will help Amazon with its plans on making its own clothing apparel which started to launch private label brands last year and for adding more physical stores in its belt. The Seattle-based company is planning to construct physical locations and store just like its bookstores in San Diego, Seattle, and Portland. According to last year’s reports, Amazon plans to open 400 more bookstores this year along with venturing the convenience store concept in their hometown called Amazon Go.
American Apparel has been founded by former Chief Executive Dov Charney in late 1990s, it mainly focused on offshore sales with its garment making waves overseas. October of 2015 is when the company filed a Chapter 11 bankruptcy protection, after surfacing as a private company that February. Then just November last year, it filed bankruptcy for the second time with an estimated $177 million in debt. According to the documents American Apparel passed, the 2009 run-in with the Immigrations and Customs over the legal employment of more than 1,800 employees is seen as one of the reasons why the company started to dwindle. The company then proceeded to layoff the employees involve causing the halt in the manufacturing and production delays and a massive 90 percent year-on-year drop in 2009’s profits.
Forever21, Gildan Also Eyes to Acquire American Apparel
The first bid American Apparel got is with Canada-based Gildan Activewear which is around $66 million for the brand along with its intellectual property. According to Gildan, the manufacturing plants in California will be used as for their own productions and agreed to keep about 3,500 workers, with that big workforce, American Apparel is seen as one of the biggest garment makers in the U.S.A.
Another bidder is Forever21, a teen apparel brand which ravages the market with its retro fashion clothing and sexualized marketing. The clothing apparel started by selling lower retail price clothing due to the lower labor costs abroad. Gildan also relies on their offshore manufacturing with 42,000 employees in the low-cost Caribbean and Central American countries.
Authentic Group LLC who also owns Aeropostale and Juicy Couture also joins the bidding war. American Apparel also has a wholesale division that provides T-shirts and other basics for screen printers; the company’s main factory in the U.S. is in Los Angeles.
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