One year since CEO Dov Charney was ousted from American Apparel, the company he founded has announced the next phase of its turnaround: doing what it does best.
After racking up losses of $300m and flirting with bankruptcy since 2010, the new plan includes a redesigned fall merchandise line, around $30m in cost-cutting initiatives and key additions to its leadership team.
For the first time in the company's history, American Apparel will later this year unveil a new autumn line focused on advanced basics and key items in both men's and womenswear.
The retailer is famous for its semi-generic and retro basics such as fairly plain t-shirts, sweatshirts, underwear, dresses and bodysuits that still draw millennials to its stores.
These simple styles are the root of American Apparel’s success. Around 90% of the brand’s revenue comes from its 600 basic products which only accounts for 25% of all the brand’s products, cites recently appointed Chief Exec Paula Schneider.
That means a lot of the product in stores is exactly the sort of noise Schneider wants to eliminate, with the intention to cut SKUs or variations on individual products by 30%, enabling Schneider to focus and develop on the successful range.
"Historically, the fall season has not been a major focus for the Company. We are beginning the process of re-merchandising the product assortment in our retail stores to increase productivity by SKU," said Schneider.
"The new styles are designed to increase revenue as we continue to evolve our product offering during this important selling season," she added.
“My goal is to make American Apparel a better company, while staying true to its core values of quality and creativity and preserving its sweatshop-free, Made in USA manufacturing philosophy.”
The clothing manufacturer has also hired new menswear designer Joe Pickman, the former head of men’s design for LA-based label Band of Outsiders, which created similarly unfussy button-ups and tailored trousers that fit right in with American Apparel’s style.
Meanwhile Schneider says that the women’s design team are trying to attract a new demographic: “So we had the young girl taken care of, and we had the party girl completely taken care of. What we were missing a lot of was this 25-to-35 millennial girl.”
This comes as an attempt to target newly independent women with disposable cash for the first time with more work-appropriate womenswear and through an increased amount of digital advertising as opposed to the print and billboard ads it previously focused on.
Schneider’s plans to cut back and focus on what already works within the company will be expanded to its stores too. Closing underperforming stores, among other initiatives, will help with overall cost-cutting measures to drive productivity improvements.
With a current conversion rate of just 1.6% site visitors turned into paying customers, the fashionable basics brand wants to streamline its workforce and footprint in areas where the market and brand is it is overrepresented and over-saturated, while also opening new stores in fast-growing territories where the brand lacks a presence and has the potential to profit.
These initiatives, some of which will begin immediately, are aimed at stabilising the company financially by maximising retail store performance and revamping the brand’s product merchandise assortment.
Recasting the brand
However, the task ahead of Schneider and the US retailer’s management team will be not be easy. While it faces approximately 20 lawsuits and administrative actions initiated by Charney and his associates, the retailer must also preserve the brand qualities which established the name and its place in customer‘s hearts while combatting it’s sleazy and gritty reputation.
"We are committed to turning this company around. Today's announcements are necessary steps to help American Apparel adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employees, and return the business to long-term profitability. Our primary focus is on improving the processes and product mix that have led to steep losses over the past five years," said Schneider.
"Our customers, employees, and local communities around the world believe that American Apparel is an iconic brand that deserves to succeed. My job is to make that a reality."