LOS ANGELES — American Apparel is expected to undergo another round of layoffs amid a plan chief executive officer Paula Schneider said will “redesign” the company’s manufacturing process in an effort to cut costs and create greater efficiencies on the factory floor.
Schneider revealed the news today to workers in a letter obtained by WWD. A spokeswoman for the company declined to comment on the letter, or on how many workers would be affected by the layoffs.
Those impacted by the cuts will be offered severance, according to the letter.
American Apparel, which emerged from bankruptcy earlier this year, has attempted a turnaround under Schneider since her arrival in late 2014 when former ceo and founder Dov Charney was ousted.
Schneider has said in multiple interviews with WWD that one of the company’s major problems has been an overhang of excess inventory, causing a glut of product that will take time to sell off. Today’s news on the manufacturing restructure appears to be an attempt to directly address the issue.
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“As I’ve mentioned before, when I joined the company, inventory was extremely high, with many styles that were not selling,” Schneider said in her letter. “To solve this, we have streamlined the number of items we display in each of our stores, and earlier this year we closed a number of stores to focus on our best-selling locations. The result of this is that we will make less product throughout the year, just enough to satisfy the needs of our customers and not so much that we are simply building inventory that we will ultimately have to sell at reduced prices.”
The specific changes at the factory level to address the issues include moving the entire production line to a single floor of the factory. “This will eliminate lost time spent delivering materials between groups and ensure consistency and quality,” Schneider said.
The company will also consider outsourcing more complicated garments, including denim. Schneider pointed out in her letter that the majority of what was produced last year — 80 percent — were basics, while the remainder were more complex items. Yet the company’s workforce doesn’t currently mirror that reality and is evenly divided between those who produce complex items versus those who produce basics.
“We are making sure our team mirrors what we’re actually selling,” Schneider said.
The company in February told workers that it was shuttering its Hawthorne, Calif., dye house in a move aimed at reducing what it called redundancies in the manufacturing process. About 20 of the 75 dye house workers were offered transfers to the company’s Garden Grove, Calif., facility.
The factory changes follow additions to the American Apparel board, revealed in late March, which saw the appointment of former Liz Claiborne Inc. chairman and ceo Paul R. Charron as chairman.
The other two board appointments include Scoop and Zac Posen ceo Susan Davidson and St. John Knits ceo Bruce Fetter.