American Apparel has been struggling lately.
The bad press and consistent backlash have even affected sales, so much so that executives are now claiming American Apparel might not even last a year.
Today, the brand sent out a press release announcing the next phase of its turnaround plan. And to no one’s surprise, it involves a lot of cost-cutting through store closures and layoffs.
According to the release, underperforming shops will be closed, while others will be built in more profitable areas; however, it is unclear just how many locations will shut down and how many employees will be affected.
"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,” newly appointed CEO Paula Schneider said in the statement. “Our primary focus is on improving the processes and product mix that have led to steep losses over the past five years. Our customers, employees, and local communities around the world believe that American Apparel is an iconic brand that deserves to succeed. My job is to make that a reality."
The store closures and layoffs are said to save the company about $30 million. But even if the store is successful in cutting costs, officials admit there’s no guarantee it will survive.
“Even if American Apparel increases revenue and cuts costs, there can be no guarantee that the Company will have sufficient financing commitments to meet funding requirements for the next twelve months without raising additional capital,” the press release read, “and there can be no guarantee that it will be able to raise such additional capital."