Executive Briefings

American Apparel's Rapid Growth Strategy May Have Contributed to Its Collapse

American Apparel opened its first stores in 2003, with locations in Echo Park, New York and Montreal. Within three years, it had mushroomed into a global chain with more than 140 locations in 11 countries. By 2009, that figure had doubled to 281 stores.

American Apparel's Rapid Growth Strategy May Have Contributed to Its Collapse

It was, founder Dov Charney once boasted, "the fastest retail roll-out in American history."

This rapid expansion helped turn what had been a little-known wholesale basics brand into a household name synonymous with colorful U.S.-made cottonwear, racy advertising and sleek-and-simple stores that dotted trendy neighborhoods across the globe. But it also saddled American Apparel with a load of debt that ultimately helped contribute to its downfall.

After filing for bankruptcy protection for the second time last year, the company sold its brand and some manufacturing equipment this month to Canadian clothing maker Gildan Activewear for $88m. Its remaining 110 stores are expected to close by April.

Real estate experts said that American Apparel initially enjoyed success by opening stores in up-and-coming neighborhoods in the U.S. in which its target demographic of young customers lived. As it grew, the chain expanded into traditional shopping malls and added multiple outposts within cities.

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It was, founder Dov Charney once boasted, "the fastest retail roll-out in American history."

This rapid expansion helped turn what had been a little-known wholesale basics brand into a household name synonymous with colorful U.S.-made cottonwear, racy advertising and sleek-and-simple stores that dotted trendy neighborhoods across the globe. But it also saddled American Apparel with a load of debt that ultimately helped contribute to its downfall.

After filing for bankruptcy protection for the second time last year, the company sold its brand and some manufacturing equipment this month to Canadian clothing maker Gildan Activewear for $88m. Its remaining 110 stores are expected to close by April.

Real estate experts said that American Apparel initially enjoyed success by opening stores in up-and-coming neighborhoods in the U.S. in which its target demographic of young customers lived. As it grew, the chain expanded into traditional shopping malls and added multiple outposts within cities.

Read Full Article

American Apparel's Rapid Growth Strategy May Have Contributed to Its Collapse