No retailer has suffered the kind of repeated blows like American Apparel. Former CEO Dov Charney has been accused of sexual harassment on multiple occasions, the company paid out a $60,000 settlement to an employee who was fired while undergoing cancer treatment, and it has contended with the threat of legal action due to its former hiring policy, which said yes to hot people and no to ugly people.
In 2011, a factory worker was killed by a circular knitting machine. The company was also sued back in 2008 for racism, paying out $300,000 to an ex-employee who was allegedly called racial slurs repeatedly by a superior. And the list goes on and on.
Most recently, American Apparel is anticipating its death as a company. After another quarter of losses, the company filed a transition report to investors stating, “The company’s existing and any new investors could suffer substantial or total losses of their investment in its common stock.”
The report shows a 17 per cent decline in sales in the second quarter of 2015, which was worse than the first. Additionally, the company had a net loss of $45.8 million over $21.7 million in the year before. In simple terms, the company is hemorrhaging and there isn’t anyone to bandage the wound.
That is, unless American Apparel can secure funding from a bank, which is the current game plan. And to add insult to injury, if that doesn’t work out, the disgraced Dov Charney is reportedly one of the potential buyers should matters get worse.
American in peril? Sounds like it.