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American Apparel to Close Stores, Improve Fall Product

American Apparel announced the next steps in its turnaround plan, which will include a redesigned fall merchandise line, $30 million in cost-cutting initiatives and key additions to the leadership team.

The troubled company, which is currently fighting about 20 lawsuits and administrative actions initiated by company founder Dov Charney, revealed it is paying deeper attention to fall product, with a fall line focused on advanced basics and key items in men’s and women’s categories.

In a press release, Paula Schneider, the recently appointed CEO of American Apparel, said, “Historically, the fall season has not been a major focus for the company. We are beginning the process of re-merchandising the product assortment in our retail stores to increase productivity by SKU.”

She added, “The new styles are designed to increase revenue as we continue to evolve our product offering during this important selling season.”

Additionally, American Apparel will undertake a series of initiatives to reduce operating expenses by approximately $30 million over the next 18 months. The company plans to close under-performing retail locations, streamline its workforce and add stores in fast-growing territories.

The company will also continue to address a series of issues including improving SKU mix, rationalizing the real estate portfolio, strengthening creative marketing, increasing supply chain agility, improving expense management processes, and maximizing new retail, e-commerce, and wholesale opportunities. However, even if American Apparel is successful in increasing revenue and cutting costs, the company may not secure the financing commitments it needs to meet funding requirements for the next twelve months without raising additional capital.

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To assist with these developments, American Apparel announced the hiring of Christine Olcu as general manager of local retail and Brad Gebhard as president of wholesale. The new additions will help execute the retail and wholesale turnaround strategies.

Olcu will lead the retail managers in optimizing sales, fleet optimization and improving store productivity. She has held senior leadership roles at companies including Express and Club Monaco.

Gebhard will focus on increasing the company’s business-to-business sales, as well as overseeing Oak, which American Apparel acquired in 2013. Gebhard has served as a consultant to American Apparel for the past four months. He has held senior roles at Nike, Speedo USA, Columbia Sportswear and Adidas.

Schneider stated, “We are looking forward to working with Christine and Brad to leverage their expertise, which will be invaluable in delivering compelling products to our customers. We are proud of our heritage as the largest apparel manufacturer in North America, and the initiatives announced today are designed to enable us to return to profitability so that we can continue to serve our loyal customers and provide fair wages to our dedicated employees for years to come.”