Spandex lovers, look out for those CLOSING SALE signs at your local American Apparel. The company, which was founded in Los Angeles by Dov Charney in 1989 has been bought out by Gildan Activewear Inc.
Gildan entered into an asset purchase agreement with American Apparel that served as the initial bid in a Bankruptcy Court-supervised auction. American Apparel voluntarily filed for Chapter 11 bankruptcy protection on the same day.
The Company’s final cash bid of approximately $88 million includes the acquisition of the worldwide intellectual property rights related to the American Apparel® brand and certain manufacturing equipment. According to the release, the Company will also separately purchase inventory from American Apparel to ensure a seamless supply of goods to the printwear channel while the Company integrates the brand within its Printwear business. Consistent with the terms of the original agreement, Gildan will not be purchasing any retail store assets.
So what does this mean for the future of American Apparel? Despite Gildan's CEO, Glenn Chamandy's statement, “The American Apparel® brand will be a strong complementary addition to our growing brand portfolio. We see strong potential to grow American Apparel® sales by leveraging our extensive printwear distribution networks in North America and internationally to drive further market
share penetration in the fashion basics segment of these markets," 227 stores in 19 countries around the world are reported to shut down.
The L.A. Times reported that American Apparel will close its Los Angeles headquarters and all of its remaining 110 U.S. store locations by the end of April.