Inside the turnaround plan that could save American Apparel

American Apparel is still reeling from the fallout caused by founder Dov Charney’s ouster from the company.

Yesterday, the Los Angeles-based retailer announced an ambitious strategy to save the brand, whose stock price has dropped significantly in the past year.

The turnaround plan involves the creation of a new fall collection, additions to the executive team, and approximately $US30 million in cost-cutting initiatives, the company said.

Some of the changes will take place immediately in order to stabilise the retailer and re-establish it as a competitive force in the apparel market.

The company is planning to close underperforming stores, cut jobs to match the future smaller store footprint, and open stores in more profitable areas, according to the company. Exact figures for jobs and stores affected by these cuts were not provided by the retailer.

The future of American Apparel lies in its ability to boost sales and revamp its image, a feat that could be difficult to pull off, executives acknowledged.

“There can be no guarantee that the Company will have sufficient financing commitments to meet funding requirements for the next twelve months without raising additional capital, and there can be no guarantee that it will be able to raise such additional capital,” the company said in a release.

Two figures who will play a key role in managing the turnaround plan are Christine Olcu, the newly appointed General Manager of Global Retail, and Brad Gebhard, newly appointed President of Wholesale.

American Apparel had difficulties in the past with high-powered executives, mainly founder and CEO Charney, who has filed multiple lawsuits against the company. It distanced itself once again from Charney in the turnaround plan.

“Management is defending the Company against approximately 20 lawsuits and administrative actions initiated by Company founder Dov Charney and his associates,” the company said. “The Company believes these cases are meritless and intends to vigorously defend such actions and, where possible, pursue remedies against Mr. Charney for his actions.”

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