The remaining 110 American Apparel (asi/35297) retail locations across the country will close by the end of April, following the company’s two bankruptcy filings and subsequent acquisition by Gildan Activewear (asi/56842). The closures will reportedly result in approximately 3,400 lost jobs.
Gildan officially won the bid to acquire American Apparel last week, after increasing its original bid of $66 million, first proposed in November, to $88 million. Among the other interested parties were Amazon, Forever 21, Authentic Brands Group and California-based wholesale supplier Next Level Apparel (asi/73867). Gildan expects the deal to be finalized by the end of February.
The Montreal-based wholesale garment manufacturer confirmed that the bid included American Apparel’s intellectual property rights and select manufacturing equipment. Gildan plans to spend an additional $15 million on current purchase orders and inventory. The acquisition does not include American Apparel’s retail stores.
At its peak, American Apparel operated 230 retail locations globally, though many of them were underperforming, according to the Los Angeles Times.
In an interview last week with Counselor, Garry Bell, vice president of communications for Gildan, reiterated that the company will not be taking over the leases on American Apparel’s La Mirada distribution center, or its two production facilities in Garden Grove and South Gate. A plan for future manufacturing is still in the works. Gildan will also not take over the company’s Los Angeles headquarters. “We can’t say yet where there will be potential job creation,” said Bell.
In a separate interview with the Los Angeles Times, Bell stated that Gildan has not ruled out the possibility of manufacturing apparel on U.S. soil, in light of the current emphasis on domestic production. The majority of Gildan’s manufacturing employees operate in the Caribbean, Central America and Bangladesh.
California, where American Apparel operated its headquarters for almost 20 years, recently announced that its minimum wage will increase in 2017 to $10.50 for those companies with more than 25 employees. The wage will rise incrementally until it reaches $15 in 2022.