The New York Post reported American Apparel is planning a slowdown at its Los Angeles factory, as well as facilities in Southgate and Garden Grove, Calif., as a means to offset mounting legal bills brought on by its founder and former CEO Dov Charney.
According to the Post, the slowdown could result in reduced hours and weeks off for thousands of the company’s garment workers. However, sources said the moves are not related to liquidity issues.
A source told the Post that there might be “some reductions in shifts as the company seeks to reduce inventory” and that the slowdown is part of a “prudent plan to reshape the inventory and ultimately better the in-store selection.”
American Apparel’s board of directors fired Charney earlier this month, after he was suspended as CEO in June for allegations of misconduct that violated the company’s discrimination and sexual harassment policies.
On Wednesday, a spokesperson for American Apparel denied allegations that the company is delaying payments to suppliers. The Post said some fabric suppliers and other vendors are getting paid 60 days late, due to a “lackluster holiday season.”
Contrary to the Post’s report, an American Apparel spokesperson said holiday sales are on track and told the Post, that the company “has had great feedback from its vendors over the past two months about the progress it has made improving the accounts payable function and they expect continued improvements in the weeks and months to come.”