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June 1, 2010

Ameircan Apparel going bankrupt

FASHION - Is sexy still profitable... or is there such a thing as being too sexy?

American Apparel, in the business of selling everything from sexy socks to sexy shirts for 21 years, is going kaput. With 280 stores in 20 countries its difficult to imagine how a company that only sells fashion items that are (more or less) chosen for their sexual appeal. Admittedly it isn't very focused... American Apparel sells everything - socks, shirts, bed linens and even stuff for kids and pets (which is a tad disturbing considering how raunchy their advertising campaigns are). They market to a very narrow audience of mostly SKINNY female 18 to 24-year-olds.

American Apparel also uses only a single factory in L.A. to pump out all of its clothes. Everything is Made in America. Except it wasn't all being made by Americans. The L.A. factory was discovered last year to be using a workforce of 1,500 illegal immigrants (one third of his staff) and has since been struggling to replace that staff with American workers.

But American Apparel wasn't paying their staff low wages either. The workers in the L.A. factory were getting double what the minimum wage is, generous health care benefits, free English lessons and even massages.

Last year, American Apparel posted sales of $559 million USD. Profits are up 93% in the last years, from a huge downturn during the start of the American Recession in 2007.

But a combination of debt (AA owes $91.4 million to London-based lender Lion Capital), over expansionism and a too narrow focus on skinny young women has resulted in a company swimming in debt and not enough skinny young women buying clothes. (Especially in the US market where 33% of teen girls are obese and approx. 60% are overweight. Which is ironic because American Apparel also owns Colossal Clothing, a plus size line for men, but not for women.)

Unless saved by a miracle investor American Apparel is expected to be out of business by the end of June.

SEX SELLS... OR DOES IT???

You've probably seen American Apparel ads before. They tend to stand out for their sheer luridness. Like watching the opening trailer for a James Bond movie.

Lots of ass, lots of breast, lots of skin in general. It appeals not to the average woman, but to the more slutty variety. American Apparel founder and CEO Dov Charney once commented "there are some of us that love sluts. It could be an endearing term."

So yeah. Unashamably slutty.

Its been the stuff of feminist debate for a generation, with women pointing out how American Apparel objectifies women... and the opposite argument that women who shop at American Apparel are simply expressing their sexuality... an idea that is bolstered by post-feminism (which says women always have a choice when it comes to how they want to express themselves).

The thing is however is that not many women have been choosing American Apparel. Its gone out of fashion to dress like a slut.

Oh sure, there will always be those women who prefer to dress slutty (for whatever reason), but the fact remains that the women out there who are buying clothes apparently are not flocking to American Apparel for their choice of slutty garments.

With time American Apparel could probably make a comeback by cutting back on production of clothing that isn't selling, focusing less on advertising and more on quality (at this point all the young women who like American Apparel already know about the store anyway)... and presumably American Apparel's style of clothing would come back into fashion and popular again at some point in the future.

But the problem is that American Apparel doesn't have that much time. Its gone the way of the Dodo bird.

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