American Apparel is seeking bankruptcy protection for the second time in just over a year, unable to find its footing in a shifting retail landscape and after a contentious fight for control with company founder Dov Charney.
Canada’s Gildan Activewear is buying the American Apparel brand, notorious for sexually provocative ad campaigns, for $66 million.
The Los Angeles retailer first filed for Chapter 11 bankruptcy protection in October 2015, about a year after it fired Charney for violating its sexual harassment policy. Charney’s lengthy legal campaign to retake control of the company was rejected by a bankruptcy court judge in January.
Charney denies the sexual harassment charges and has claimed the company was taken from him in a “coup.”
The company brought in CEO Paula Schneider to usher the company out of bankruptcy, but she left earlier this year as the turnaround stalled.
For more than a decade, American Apparel has been defined by, and criticized for, its racy ads, often depicting barely-dressed young women in sexually suggestive poses.
Though the ad campaign helped put American Apparel on the map, it has struggled like other retailers since the recession. A host of mall
staples — Aeropostale, Pacific Sunwear, Wet Seal and Deilia’s —have also filed for bankruptcy protection in the past few years.
Even as department stores like Macy’s, Kohl’s and Penney’s prepare for a holiday season that may be the best in years, they have been unable to produce consistently positive results because consumer behavior has shifted so drastically, both in where and what is bought.
Many more people shop on online, and more dollars are going toward technology, travel, or nights out.
American Apparel, which manufactures all of its clothes in the U.S., has lost money every year since 2010.
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