American Apparel — at one time valued at $1 billion — has a valuation hovering around $180 million to $270 million.
That’s according to an analysis done by Moelis & Company as commissioned by the Los Angeles retailer, which was disclosed in documents filed in U.S. Bankruptcy Court Thursday. American Apparel filed for Chapter 11 bankruptcy earlier this month after a rugged stretch that saw the ouster of founder and former chief executive officer Dov Charney late last year and the ensuing media circus that followed as supporters of Charney clamored to get him back into the company. Meanwhile, the business continued to struggle under the weight of its debt load.
The valuation is based on the assumption the firm is able to reorganize and carry out financial projections laid out in court documents following its emergence from bankruptcy.
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The company painted a rosy outlook for its future beginning in 2016, when it estimates it will emerge as the reorganized American Apparel.
Based on the company’s plan, American Apparel said it expects to realize net income of $6 million in 2018 and $23.7 million by 2020. The company estimates to come out of this year with a loss of $75.96 million.
Sales are expected to begin climbing in 2016 and projected to be $615.97 million by 2020.
Direct-to-consumer retail continues to make up the bulk of the company’s business. American’s Apparel’s 212 stores generated $331 million, or roughly 54 percent of the company’s overall sales last year. The company’s wholesale business was about 31 percent of the business in 2014, amounting to $187 million. Online is still relatively small at 10 percent of the business last year, or $61 million.
As the company moves forward, there’s still the question of what Charney might be able to stitch together in the way of a buyout. There’s been chatter that Charney has been meeting with prospective investors. Such a move might help appease the workers who have attempted to unionize, calling for his return.
The General Brotherhood of American Apparel Workers said it represents some 3,000 garment workers and continues to hold weekly protests at the company’s downtown Los Angeles headquarters.
The company said in its filing Thursday that the union holds the potential to derail its reorganization plans and could result in increased work stoppages and higher labor costs. American Apparel also said in the same filing that manufacturing is likely to stay within the Los Angeles area. It’s unclear what impact changes to the city’s minimum wage — to be rolled out over the next few years — could have on the company’s labor costs.