LOS ANGELES — American Apparel has nabbed a former Band of Outsiders designer in a move that fills out the new executive team under chief executive officer Paula Schneider, as she seeks to stabilize the struggling company.
This story first appeared in the April 7, 2015 issue of WWD. Subscribe Today.
Joseph Pickman, former Band of Outsiders men’s design director, joined American Apparel last week to head up men’s design as the firm seeks to revive that business.
“The men’s business has been trending down for quite a while and we need to really work on bringing that back up to where it could be because we have the consumer, but the conversions aren’t there,” Schneider said in an interview. “So we’re working really hard to update our basics and to also have a better merchandised experience when you walk in [stores].”
Pickman, who had been with Band for three-and-a-half years, is now tasked with revamping the men’s offering to elevate it and “bring a lot of the aesthetic that I developed at Band of Outsiders — that same spirit — for the new product here,” he told WWD from American Apparel’s downtown Los Angeles headquarters.
“We really, really work on the fit first — because the fit is what makes the customer feel good in the clothes — and then we look at fabrics,” Pickman said. “What can we add to that assortment? Can we give them something a little more refined and still call it a basic?”
Pickman’s hiring follows the February addition of senior vw ice president of marketing Cynthia Erland and Thoryn Stephens as chief digital officer, a new position at the company. Creative director Iris Alonzo and designer Marsha Brady were dismissed from the company in February.
“We think the team is where it needs to be,” Schneider said. “We’ll continue to evolve like any business and we’ll continue to assess, but I think we’re looking good and I think we’re looking really good for fall.”
Schneider sees fall as a pivotal point for American Apparel because its product assortment will be more “robust” and reflect the full efforts of the new team and strategy.
The company’s gone through a massive inventory cleanse, ridding itself of millions of units of product, according to Schneider.
“We still have a couple million units left so it’s just stuff that didn’t work, or that didn’t sell or they made too much of,” the ceo said. “I think a big part of it had to do with the demand forecasting that wasn’t in place where you made more than you could sell. Even if it was a great style, if you brought it out last year and the year before and the year before that, probably whoever came [into stores] has already bought it so we need to infuse new. It’s a whole different merchandising strategy than was here before.”
Twelve weeks in and Schneider has had more to contend with than most ceos brought in to heal an ailing company.
American Apparel has racked up more than $300 million in losses over the past five years as it lost its footing with consumers and buckled under the weight of more than $200 million in debt. The company’s shares are down about 33 percent so far this year for a recent market value of $121.62 million. On Monday they closed down 1.4 percent at 69 cents.
American Apparel last week cut about 180 jobs, offering severance packages to affected employees, many of them in Southern California manufacturing positions. That follows 238 layoffs last year and 160 in 2013 under founder and former ceo Dov Charney, who was fired from the company last year. Charney is reported to be close to filing legal action against American Apparel seeking some $40 million in damages. There is also an SEC investigation that was launched in February looking more closely into the events surrounding Charney’s dismissal.
Schneider declined to comment on whether more cuts are anticipated except to say “these are our needs for today.”
“I walked in here on January 5, there’s debt. There’s expensive debt. We’re paying 15 percent interest when most people are paying 5 or 6 based on previous management setting that up. Millions of units of excess inventory and very little cash flow. Yeah, you make decisions,” she said. “Otherwise, we’d go right off a cliff and it’s way too important a business to let that happen.”
Once the business is stabilized, Schneider expects to grow the company’s retail operations, which she characterized as “tremendously underpenetrated.” American Apparel counts 240 stores in 20 countries.
The company’s wholesale business — printables and business to business — also hold potential longer term. “It’s very small right now,” she said of the business-to-business side of wholesale. “We think that could grow exponentially. We also think that our e-commerce side could grow exponentially.”
Then there’s the potential of wholesale. The company is looking at what retailers it would potentially partner with on the wholesale side and if it were to work with department stores, it would be better-end options, Schneider said.
“But first, before we do that,” she said, “we have to stabilize and we have to stabilize the merchandising. We have to stabilize the design. We have to make sure the fits are good and that’s what we’re working on right now.”