BUSINESS NEWS: AMERICAN APPAREL VALUATION FALLS
Oh how the mighty have fallen! American Apparel, the fast fashion retailer once valued at $1 billion, is now reported to be worth a mere $180–$270 million. Earlier this month we reported that the retailer filed for Chapter 11 bankruptcy for a slew of reasons including the brand’s lengthy monetary battle with former founder and CEO Dov Charney to the company’s hefty debt.
This data stems from a recent report completed by Moelis & Company under the assumption that American Apparel is able to reorganize and follow through on financial projections following its emergence from bankruptcy. The brand projected a bright outlook for next year and expects to benefit from a net income of $6 million in 2018 and $23.7 million by 2020.
Direct-to-consumer retail continues to make up the majority of the business and as the company moves forward, uncertainty around whether Charney will be able to sort a buyout lingers. Meanwhile the General Brotherhood of American Apparel Workers, which represents 3,000 garment workers, continue to protest outside the brand’s LA headquarters.
The company fears that this union holds the power to derail its reorganization plans resulting in an increase in worker strikes and higher labor costs. Will the clothing retailer revive itself or will a continued influx of disgruntled workers contribute to the brand’s downfall once and for all?