Youth fashion retailer American Apparel is reportedly set to close a number of stores globally and lay off staff after it found itself dangerously in the red.
The heat will certainly be on new CEO Paula Schneider who seized the top job in mid-2014, ousting former owner and founder Dov Charney who was sacked for alleged harassment of staff.
American Apparel has stores in Sydney, Melbourne and Adelaide, but typically sells online to a Gen Y audience.
When Schneider was elevated to the top job she vowed to dispense with the brand’s raunchy advertising which some claimed veered close to kiddy porn. Although, it must also be said that much of the debt the brand now faces was accrued, for most parts, under Charney’s stewardship.
The brand famously uses young models in various states of undress often with their legs wide open and crotch exposed.
However, Schneider wanted to veer the brand’s marketing away from raunch and in February said of the new direction: “There’s a way to tell our story where it’s not offensive. It is an edgy brand. And it will continue to be an edgy brand.”
Despite Schneder’s comments, in March the UK division of the company was busted by Britain’s Advertising Standard’s Authority for showing what appeared to be an under-age teen in a thong-bikini.
The brand, under Schneider, has dispensed with the raunch and gone for a more fun look in its advertising, often incorporating gay and lesbian youth into campaigns.
In a sign of how grim things are for the brand, in statement the company said: “Even if American Apparel increases revenue and cuts costs, there can be no guarantee that the company will have sufficient financing commitments to meet funding requirements for the next 12 months.”
There has been no reports what, if anything, would happen to the Australian outlets if the cost cutting measures were to be introduced.
Another problem for the brand is the ongoing legal stoush with its former owner. Dov Charney apparently has 20 onging lawsuits against the company he founded in 1991 starting as a basic T-shirt manufacturer.
Alongside closing stores and cutting staff, the brand plans to increase its Autumn and Winter ranges – and area it typically hasn’t been strong in.