American Apparel, which was once dubbed “the largest apparel manufacturer in North America,” declared a Chapter 11 bankruptcy in 2015 and then again in 2017. In January of last year, a Delaware bankruptcy court approved the $88 million sale of American Apparel’s brand and intellectual property to Gildan Activewear Inc., a Montreal based clothing company. In addition to the $88 million, Gildan will pay $15 million in order to acquire American Apparel’s inventory and purchase orders. This is done in an effort to relaunch American Apparel and reopen a store in Los Angeles, where the company once established itself and became popular.
While Gildan’s chief executive, Glenn Chamandy, is still unsure about the future of American Apparel’s relaunch, he has a plan in mind. Gildan is a wholesaler that specializes in making customized t-shirts. The company used their background in this field and began relaunching American Apparel by selling low-cost plain t-shirts to other brands for customization. This then led to the revamp of American Apparel’s website, which is now up and running again. However, one of the biggest changes that Gildan has made since its acquisition of the brand is manufacturing its products offshore as opposed to it being made domestically. This is a major modification to American Apparel as the brand initially gained popularity for its “Made in America” reputation. However, after much research and consideration, Chamandy discovered that manufacturing the clothing in Central America will result in a cheaper manufacturing cost and therefore a higher profit margin.
With all these new innovations, American Apparel is predicted to regain traction over the next year. This starts with its first brick and mortar store opening up in the next few months. While the future of American Apparel is unknown, this purchase could be the company’s much-needed chance to reinvent itself.