August 15, 2018

Amazon to Buy American Apparel?

It has been reported that online retail behemoth Amazon is considering its own apparel manufacturing and design venture through the creation of an activewear and t-shirt range. A Reuter’s report suggests a great many established clothing brands are currently in a fierce bidding war to acquire the recently bankrupt American Apparel, after its second bankruptcy filing in November of 2017.

Amazon, Next Level Apparel and Forever 21, along with the brand licensing concern Authentic Brands Group, are all said to be in negotiations with American Apparel’s financial advisers with offers said to be deadlined for Friday. Amazon has been described by one source as seeking an entry point into the fashion industry and, the online retail giant stands to benefit greatly from breathing life back into the American Apparel brand in this regard.

With marquee brands like Forever 21, Next Level Apparel, Juicy Couture and Amazon looking to attain ascendency in this rag-trade turf war, it seems likely that American Apparel will fetch a worthy market price in much the same way that clothing brand Nasty Gal did after its own recent bankruptcy filing. Nasty Gal sought bankruptcy relief in November of 2016 and recently announced an acquisition bid from British brand BooHoo to the tune of $20 Million. However, ownership of the fallen T-shirt manufacturing giant American Apparel may be harder to come by than simply signing on the dotted line, as potential suitors will need to best the  current $60 million plus monster bid from Canadian apparel company, Gildan Activewear. 

Gildan is a Canadian activewear company specializing in t-shirt manufacture and distribution that is  looking to augment its standing as a low-cost blank t-shirt supplier to custom printers, and to compete with the likes of market leaders SpectraUSA in the North American blank T-shirt market. It is rumored that Gildan would like to acquire the bankrupt apparel giant as a way to strengthen their t-shirt production division. However, once acquired, Gildan would most likely move production offshore to one of the low-labour-cost countries which Gildan typically prefers to use for the production of its apparel lines. Unlike Gildan however, Spectra USA uses a locally-based labor force working with little-to -ero imported raw materials in the production of their renown apparel lines.

American Apparel, probably most famous for their low cost made-in-America activewear and quality t-shirt line, struggled to keep its nose above water after dismissing its (then) CEO and founder, Dov Charney in 2014 during financially challenging times. Charney was replaced by Paula Scheider who’s tenure was short-lived and exited in the fall of 2016, hardly helping the woeful fortunes of the beleaguered apparel giant.


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