Monday, April 4, 2011

[News] Exclusive: American Apparel Launches Denim Amidst Rumors of Bankruptcy

Monday, Apr 4, 2011 / 4:23 PM
American Apparel has dominated the headlines recently for all the wrong reasons: former employees alleging that the label’s founder, Dov Charney, sexually harassed them; the company recently reported a net loss of $86.3 million for 2010; today’s WWD reports that “a looming April 30 deadline that could cut off its ability to borrow from banks and cover daily operating costs, which could potentially trigger a Chapter 11 bankruptcy filing.” In spite of all that–and perhaps in some part because of the troubles the label is facing–American Apparel is launching denim.
“Jeans are an iconic, essential part of the modern wardrobe, just like the t-shirt,” Charney said in a press release announcing the launch. “No one does basics like American Apparel. We’ve mastered the basic t-shirt, now we’re getting excited about jeans.”
American Apparel’s denim line has been in development for a year and will be in store tomorrow (and trickling into a few stories today). The line launches with two styles for women–a high-waist tapered leg blue jean and a high-waist cuffed jean short–and plans to roll out a heavy-weight untreated men’s jean for back to school. The jeans will be produced in American Apparel’s LA factory, using 100% cotton 14 ounce denim which is thicker–i.e. made to be broken in. The jeans will retail for $80, and the sewing and dying process to complete a single pair of jeans uses more than 40 fair wage workers.
American Apparel has tapped denim vet Georges Atlan to be the director of denim production. Atlan’s indigo resume includes launching Guess jeans with Georges Marciano in 1980 and he’s worked with most major denim brands including Levi’s, Seven, Rock & Republic, Joe’s jeans, and Calvin Klein to name a few.
So can denim put American Apparel back on track? That remains to be seen. It’s undeniable that the company’s in financial hot water right now. But as for filing for Chapter 11, Charney told WWD today “In my opinion, there’s no chance of that. That’s not an option we are going to explore…We have a variety of options. We could do a private placement of stock. Or we could use the resources we have. We do $10 million a week in sales.” When Reuters asked Charney why his company might file for Chapter 11 he responded, “”Why don’t you speak with a legal expert and he’ll tell you why…we have to put it as a risk factor if it’s in the realm of possibility, even if it’s 1 in 1,000.” Chapter 11 or not, American Apparel’s brand is strong, their basics can’t be beat (we imagine their denim will fit right into their stable of staples) and they’re probably not going anywhere anytime soon.


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