American Apparel Announces Strategic Changes

Will Also Redesign Clothing Line In Fall

American ApparelTop 40 supplier American Apparel (asi/35297) has hired a new president of wholesale – the division that encompasses its promotional products sales. It was one of many sweeping changes the struggling company announced Monday as part of its ongoing strategic turnaround plan. The company also plans to cut expenses by roughly $30 million over the next 18 months, and launch a redesigned clothing line in the fall.

As the president of wholesale, Brad Gebhard will focus on increasing the company’s imprintable and business-to-business sales. The wholesale side of American Apparel has been one of the few bright spots, with the company seeing year-over-year increases in the North American ad specialties space, reporting to Counselor that its 2014 North American promo products sales were $105 million, 6% higher than in 2013. Gebhard has served as a consultant to American Apparel for the past four months and has held senior leadership positions at apparel companies including Nike, Speedo USA, Columbia Sportswear and Adidas.

American Apparel also hired Christine Olcu as general manager of global retail. Olcu has a background in building retail businesses. CEO Paula Schneider said Gebhard and Olcu’s expertise “will be invaluable in delivering compelling products to our customers.”

Among the $30 million in cost-cutting measures announced Monday will be workforce cuts and the closure of underperforming retail locations. “We are committed to turning this company around,” Schneider said. “Today’s announcements are necessary steps to help American Apparel adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employees and return the business to long-term profitability.”

As American Apparel looks to the future, it continues to deal with its past, defending itself against approximately 20 lawsuits and administrative actions initiated by company founder and former CEO Dov Charney and his associates. Charney was fired in December by American Apparel’s board of directors for alleged misconduct and violations of company policy. Charney has since been seeking millions of dollars in damages in a series of lawsuits. In a press release, American Apparel executives called the cases initiated by Charney “meritless” and said they intend to “vigorously defend” them.