American Apparel will shutter its Hawthorne dye house as it continues to trim expenses fresh off its emergence from bankruptcy.
Workers at the facility, located about 15 miles southwest of downtown Los Angeles, were notified of the closure via a letter signed by chief executive officer Paula Schneider, a copy of which was sent to WWD.
The company declined comment.
The facility employs 75 workers, of which 20 are being offered transfers to the company’s Garden Grove, Calif., facility in Orange County, according to sources with knowledge of the matter.
American Apparel, which filed for bankruptcy in October and emerged from it this month, employs about 7,900 workers companywide. Hawthorne is one of six facilities, operated by the company in Southern California that includes its downtown Los Angeles headquarters where sewing, cutting and knitting occurs. Operations are also scattered elsewhere, in Los Angeles, South Gate and Garden Grove, in addition to a La Mirada distribution center.
Hawthorne is the second-to-smallest facility — by employee headcount — for the company, based on what American Apparel reported in its bankruptcy plan.
The letter obtained by WWD — in Spanish — called the move a business decision to help the company swing back to profitability following “significant losses” since 2010. It’s also an effort to trim certain workforce redundancies, according to the letter.
Although the company emerged from bankruptcy with significantly less debt and a plan to right itself, the business remains challenged. The company saw a 19 percent decline in its most recently reported quarter — the three months through September — to $126.05 million. It widened its net loss to $25.56 million, compared with $19.18 million in the year-ago period.