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American Apparel – Can they mend their finances?

The headquarters and main factory of American ...
American Apparel HQ in LA. Image via Wikipedia

This is a first for my blog as I’m self confessed barely interested in fashion, especially not high fashion. Still, the recent news regarding the financial state of American Apparel is something I’d like to talk about.

`They’re apparently close to bankruptcy and that wiyld be a shame for them, especially as I am a would be fan of their fashion style. I’m very much into the casual look that they market. The idea of branding free t-shirts and jeans appeals to me, although I wouldn’t want to wear it all the time. Regardless of their style, I am wondering how they got themselves into this position.

The company has a very ethical business model. They don’t outsource manufacturing to cheaper nations, and they pay a good wage to all of their workers, creating jobs in the US which is commendable.

The founder of the business, Dov Charney, despite introducing all of these great initiatives is also a very controversial character. He’s infamous for his strange, sexual behaviour at the office and involving quite a few of his female employees. Rather than getting into the detail of all this, including the multiple sexual harassment allegations, I want to instead focus on whether or not his reputation has damaged that of his business as well, or whether the business can distance itself from him. The problem is that he is so visible at the head of the company that it’s hard to ignore him.

Personally, despite the fact that he himself is not exactly the most likeable of people, I would hate to see the company go down. It’s the same when anything like this happens to any reputable business. I doubt you can pin the blame solely on Charney, at least not for his controversial nature. I think something has gone badly wrong with the business model. Whether it’s their ethical methods not making business sense, too much and too rapid growth in retail, the fashion becoming a fad and falling out of favor or something else entirely. It’s hard to say but they have to figure it out quickly and make big changes.

Watching this interview with the boss makes me sad really, when you see their meteoric rise and now how it’s gone wrong just 3 years later. I’ve read articles in The Guardian recently and they didn’t bring across the likeable nature of Charney and only focus on the negative tabloid headlines, whether exaggerated or not. I feel that he may just be a nice guy who acts a bit stupid at times and therefore makes himself an easy target for lawsuits and news stories.

They have a solid brand and perhaps, if and when they get bailed out by investors or somehow rescue themselves, they can refocus on what they can do better than everyone else, and go from there.