BRANDS ON THE VERGE

99 Brand Problems: American Apparel Faces Potential Restructuring after Blunders and Turmoil

After a series of problems ranging from sexual harassment claims to deplorable hiring practices that damaged the company’s integrity, Reuters reports that American Apparel is potentially seeking a restructuring firm at the urging of their lender, Bank of America. AA stock has severely plummeted, and the company may be facing a lawsuit by a shareholder who believed American Apparel did not relay the true financial state of the company.

According  to WWD, American Apparel’s lenders at Lion Capital have agreed to alter the terms of their agreement, allowing the retailer to avoid what seemed like impending bankruptcy. Lion Capital partner Lyndon Lea stated, “Lion Capital has enormous admiration for both American Apparel and its founder, Dov Charney,” he said. “We are working together with Dov to realign the capital structure of American Apparel to support a number of key initiatives within the business, including the hiring of several new senior executives.”  So far, the deal has had positive effects. American Apparel’s stock rose 16.3 percent to $1.43 on Friday.

CEO Dov Charney and company are also taking a new preppy and less risqué approach to marketing to salvage the brand by using the likes of actor and comedian Drew Carey in a throwback game show-styled commercial and a recently released ad titled, “In Bed with the Boss,” featuring Charney with two employees working on a laptop. Read more. (WWD)

This entry was published on 10/02/2010 at 9:50 pm. It’s filed under All Posts, Fashion, Retail and tagged , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

One thought on “99 Brand Problems: American Apparel Faces Potential Restructuring after Blunders and Turmoil

  1. That’s unfortunate, I love AA!

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