LOS ANGELES — A real struggle for power at American Apparel has been unraveling in the public eye for the better part of a year now.
Regardless of whoever gains control, the victor inherits a company that’s slowly taking steps in its evolution as a business, although it is still far from completing a successful turnaround.
“Overall, business is tough, but you know the green sprouts are that new product has been way outperforming things that we had in the store,” chief executive officer Paula Schneider told WWD in an interview at American Apparel headquarters.
Just hours before, founder and former chief executive officer Dov Charney revealed he had linked with Los Angeles investment firm Cardinal Advisors LLC to explore the potential for a bid to buy American Apparel out of bankruptcy in a move that made it clear — in case anyone had any doubt — that Charney had no intention of going away quietly.
The debtor-in-possession financing granted to the company has given it breathing room to continue to plod on with a turnaround. The question now is whether it can make the needed changes. Schneider called 2015 the year of stabilization in which the focus turned to product, a strategy she has repeated in numerous interviews.
“That’s the whole idea…for us to be able to really use nice fabrics because we make great product,” Schneider said. “We just needed the runway and the cash. It wasn’t all about just trying to hold the company together. Now it’s about what do we need to do to prosper.”
A director of research and development has accepted an offer to work at the company and is expected to start in the first quarter. Schneider declined to name the new hire.
Spring 2016, coming in at more than 130 styles across men’s and women’s, is a shift in a new direction.
Product development and the design teams are working on sourcing new blends, such as cotton modal, brushed jerseys and new linen fabrications that allow them to play with silhouettes in an effort to woo back customers that may have left the company. Think drop shoulders, T-shirt bodysuits and mock necks.
“I think it’ll help reel in the girls who thought they might have grown out of us in some aspect, but then we’re definitely not trying to alienate our current customer,” said director of merchandising Tasi Rippel.
It’s a big step in the right direction, members of the design and development teams say, though to say spring 2016 fully realizes an evolution of the product assortment is a big statement, said vice president of product development and design James Yunker.
“I think we’re making huge strides to keep the brand fundamentals but slowly elevate it and still maintain a strong price point,” he said.
Joseph Pickman, brought over from Band of Outsiders in the spring to head up men’s, added there’s been strong focus on fits on the men’s side. Items that were big and boxy are getting slimmer fits. He pointed to a classic, white oxford shirt and a twist on that same shirt in striped pastels. “Timeless is what we’re trying to go for with our men’s,” Pickman said. “Just timeless, perfectly fitted looks.”
Black Friday, Schneider said, was a mixed bag for the company with stores in markets such as New York not faring as well. A cleanup of a store in SoHo, which involved a re-merchandising strategy and the pullout of some 10 sales fixtures and about 40 percent worth of product, helped significantly and called attention to a need to do that across many stores.
“We’re still way over-assorted,” Schneider said. “We still have a lot of product in stores selling at 1 and 2 percent a week and this is product that’s been there for years and it needs to move on now. It’s been at the party too long.”
New product continues to do well but excess inventory, something Schneider has mentioned as a challenge since coming to American Apparel, remains an issue. It’s unclear for how much longer.
“There’s still quite a bit and more than most retailers will ever see in their lifetime that we own of slow-moving inventory,” she said. “We’ll always have a sale rack in the stores. There will be a sale after the holidays, but we’re going to be very selective about what we put on sale and how we put it on sale and how we mark it down.”
Perfecting the product for the company’s direct-to-consumer business is one part of the story; the other is the push it’s making into department stores on the wholesale side.
Two months ago, the company tested summer product at a recently opened Bloomingdale’s in Hawaii and the company received word that test will be expanded to eight stores, with the hope of getting an all-door deal eventually, according to president of global wholesale Brad Gebhard. Where those eight stores are concentrated is still pending.
In November, Gebhard traveled to Germany and France, which gave way to an order from About You, a German high-end e-commerce site that’s part of the Otto Group. The deal is viewed by American Apparel as a foot in the door to Otto’s portfolio of 180 different brands and retailers, he added. There was also a presentation to Galeries Lafayette in Paris and “we’re about 95 percent of the way to getting that order,” Gebhard said.
The wholesale strategy moving forward, particularly among department stores, will concentrate on the higher end.
“This is a new business strategy that Paula has brought as she came in with her strategic plan to develop the brand in other channels other than where we are currently,” Gebhard said.