The company filed for bankruptcy in October 2015 and then again in November 2016. Almost 2,500 employees were terminated in January 2017 as the company began shutting its factories and over 100 stores worldwide.
| Year | Event |
|---|---|
| 1975 | Founding of DeLorean Motor Company by John DeLorean. |
| 1981 | Introduction of the DeLorean DMC-12, featuring stainless steel exterior and gull-wing doors. |
| 1981 | Investment from the UK Government to save the struggling company’s manufacturing facility in Northern Ireland. |
| 1982 | Legal Troubles: John DeLorean arrested and charged with drug trafficking, tarnishing the company’s reputation. |
| 1982 | Bankruptcy and Closure: DeLorean Motor Company files for bankruptcy, leading to the cessation of DMC-12 production. |
| 1983 | Manufacturing of DMC-12 ceases; remaining inventory acquired by an Ohio-based company and sold. |
| 1995 | DeLorean Motor Company purchased by DeLorean enthusiast Stephen Wynne, who begins restoring old DeLoreans. |
| 2019 | Potential Revival: Stephen Wynne suggests plans for a modern SUV or electric-based DeLorean. |
| Event | Description |
|---|---|
| Founding and Early Success | American Apparel, founded in 1989 by Dov Charney, was initially known for its “Made in the USA” approach to clothing manufacturing. The company gained a reputation for its simple and stylish basics, such as t-shirts and leggings. It promoted ethical manufacturing practices and became popular among young consumers for its commitment to sweatshop-free production. The brand’s provocative advertising campaigns, featuring semi-nude models, also garnered attention. |
| Explosive Growth and Controversies | American Apparel experienced rapid growth throughout the 2000s, expanding its retail presence and becoming a global brand. However, the company was no stranger to controversies, primarily related to its founder, Dov Charney. Charney faced multiple sexual harassment lawsuits, and his behavior raised concerns about the company’s corporate culture. Despite these issues, American Apparel continued to expand and attract a loyal customer base. |
| Financial Challenges | Despite its popularity, American Apparel faced significant financial challenges. The company’s emphasis on manufacturing in the United States, while noble, led to higher production costs compared to offshore competitors. It struggled with mounting debt and had difficulties generating consistent profits. The controversies surrounding Dov Charney also took a toll on the company’s image and finances. |
| Ouster of Dov Charney | In June 2014, the American Apparel board of directors voted to remove Dov Charney as CEO amid allegations of misconduct and financial mismanagement. This move marked a major turning point for the company, as Charney had been the face of American Apparel since its inception. |
| Bankruptcy Filing (First Time) | American Apparel filed for Chapter 11 bankruptcy in October 2015. The bankruptcy was primarily due to its financial troubles, including declining sales and heavy debt. The company continued to operate during the bankruptcy proceedings, with a focus on restructuring its operations and reducing its debt load. |
| Acquisition by Gildan Activewear | In January 2017, American Apparel’s brand and intellectual property were acquired by Gildan Activewear, a Canadian apparel manufacturer, in a bankruptcy auction. However, Gildan did not assume ownership of American Apparel’s retail stores, and many of them closed as a result. |
| Decline and Additional Bankruptcy | Despite the acquisition by Gildan, American Apparel struggled to regain its former prominence. The brand faced intense competition in the fast-fashion industry and struggled to resonate with younger consumers. In November 2018, Gildan announced that it would be discontinuing the American Apparel retail brand. Subsequently, American Apparel filed for bankruptcy for the second time in November 2019. |
| Legacy and Influence | American Apparel left a lasting impact on the fashion industry with its commitment to ethical manufacturing practices and “Made in the USA” ethos. The brand’s approach to marketing and provocative advertising campaigns also influenced fashion marketing strategies. While the company faced challenges and ultimately closed its retail operations, its legacy as a pioneer in ethical fashion manufacturing endures. |
| Shift to E-commerce and Wholesale | After its retail stores closed, the American Apparel brand continued to exist as an e-commerce and wholesale business. Gildan Activewear, the brand’s owner, focused on selling American Apparel products through online channels and to other retailers. The brand’s iconic basics were still available to consumers, albeit through different distribution channels. |
Background
American Apparel is a former bricks-and-mortar fashion retailer now available exclusively online.
The company was founded in 1989 by Canadian businessman Dov Charney. At its peak, the retailer was synonymous with provocative advertising, hipster-cool fashion, and supporting social issues around immigration and LGBT rights.
American Apparel also manufactured its products in Los Angeles. It became celebrated for paying its workers a proper wage in an industry notorious for poor working conditions.
Following is a look at how a company championing social issues, worker rights, and with revenues topping $211 million fell from grace.
Sexual harassment lawsuits and company culture
By 2007, three former employees had filed sexual harassment lawsuits against Charney alleging he had used crude language and gestures in the office and hired women for whom he had a sexual interest.
In one case it was even alleged that Charney conducted job interviews in his underwear.
Lawsuits became somewhat of a regular occurrence for Charney, with claims of racial discrimination added to the various sexual harassment lawsuits in 2011.
American Apparel was also known for its controversial staff-hiring practices.
Potential employees were required to attach photographs to their applications, with Charney approving or vetoing each application based on perceived attractiveness.
Charney also encouraged store managers to fire any employee they deemed not good-looking enough to work there.
This created a hostile work environment and an extremely toxic culture. American Apparel’s brand image suffered significant and irreparable damage.
Cultural shift
American Apparel became successful by identifying the elements that made hipsters attractive and then recreating that aesthetic in their stores.
But as the hipster counterculture began to lose its allure, so too did American Apparel.
Its customers migrated to fast-fashion retailers such as Zara that had a focus on inexpensive clothing with a high-end, designer-like feel.
Much of American Apparel’s downfall can be attributed to a failure to evolve.
As its competitors expanded their product range, the company stuck with a handful of different styles and never really deviated from its core offering.
Illegal workforce
Despite the company claiming it paid Los Angeles workers a fair wage, an investigation by U.S. Immigration and Customs Enforcement found 1,600 American Apparel employees were not authorized to work in the United States.
Most of these workers were fired immediately, but the brand suffered further damage as the company appeared to contradict its own values around worker rights.
Charney is fired
Charney was fired in 2014 after more claims of sexual harassment and also misuse of company funds.
Distancing Charney from the American Apparel brand was seen as a pathway to future success. However, the company’s rapid expansion until that point meant it had considerable debt with little cash to fund operations.
This was highlighted when it failed to produce enough liquidity to release its new fashion line for the spring of 2015. In response, 40 underperforming stores were closed and worker overtime entitlements cut.
American Apparel then filed for bankruptcy after revealing it had not made a profit since 2009.
Gildan acquisition
American Apparel was acquired by Gildan Activewear Inc. in 2017 for $88 million after the company filed for bankruptcy for a second time.
Several changes have been instituted by Gildan. Gone are the overtly sexual culture and advertising campaigns which harmed the brand’s reputation. The company also acquired the American Apparel brand but not its stores, so clothing can now only be purchased online.
Much of American Apparel’s clothing range is also sourced from developing nations such as Honduras and Nicaragua and not the United States.
Key takeaways:
- American Apparel is an American fashion retailer originally founded by Dov Charney in 1989. The brand championed social issues and locally made products but soon faltered and entered into two separate bankruptcy proceedings.
- American Apparel was frequently associated with sexual harassment lawsuits filed against Charney by female staff which damaged its brand reputation. The company also lost market share as the hipster counterculture began to weaken.
- American Apparel was found to be employing illegal workers after a governmental investigation. Charney was fired in 2014 to revive the brand, but mounting debts and a lack of liquidity meant the company would never recover.
Quick Timeline
- American Apparel was a fashion retailer founded in 1989, known for its provocative advertising, hipster-cool fashion, and support for social issues like immigration and LGBT rights.
- The company faced multiple sexual harassment lawsuits against its founder, Dov Charney, leading to a toxic work culture and damaged brand reputation.
- As the hipster counterculture lost its allure, American Apparel failed to evolve, leading to a decline in customer interest and competition from fast-fashion retailers.
- An investigation revealed that a significant number of American Apparel’s workers were not authorized to work in the United States, contradicting the company’s values around worker rights.
- Charney was fired in 2014, and the company filed for bankruptcy twice, burdened by debt and lacking liquidity.
- American Apparel was acquired by Gildan Activewear Inc. in 2017, leading to significant changes, including the elimination of overtly sexual culture and advertising campaigns. The brand now sells exclusively online and sources clothing from developing nations rather than manufacturing in the United States.
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