American Apparel Saved From Bankruptcy
are afoot at American Apparel, hopefully for the better. For one, they e-mailed us today about the ad you see here called “In Bed with the Boss,” which depicts the company’s creative directors in bed with CEO Dov Charney, which is apparently his preferred method of conducting business. It might have helped distance the brand from their predictably raunchy ad images of girls in skimpy leotards bending over or contorting their legs every which way had it been added to the brand’s online ad archive and appeared in more than one magazine aside from Gentlewoman. But maybe they’ll do more of this down-to-earth, chilling-with-the-family-pet sort of advertising to help soften its image in the face of immense financial crisis.
As for those money woes, things are looking up a little bit! American Apparel’s lenders at Lion Capital have agreed to alter the terms of their agreement with the retailer so that they don’t have to file bankruptcy. Lion Capital partner Lyndon Lea remains upbeat about investing in a company that’s had such highly public difficulty paying off its debts. “Lion Capital has enormous admiration for both American Apparel and its founder, Dov Charney,” he said. “We are working together with Dov to realign the capital structure of American Apparel to support a number of key initiatives within the business, including the hiring of several new senior executives.” American Apparel CEO Charney continues to defend his position:
“Retail is hard right now,” he said. “I’m not alone in this. You have to work for every dollar, you have to work on the merchandise, make sure the product mix is perfect and the allocation is right. It’s a tough market right now.”
American Apparel’s stock rose 16.3 percent to $1.43 on Friday thanks to the deal. The stock peaked at $15 in December of 2007 and plummeted to 66 cents this year. Under the terms of the new agreement with Lion, American Apparel is not completely out of the woods. They still have to do things to prove they are a functional retail establishment worthy of this aid to its survival, like, oh, sell merchandise. The company must turn a pre-tax profit of $20 million over the 12 months ending January 31, and by September 2013 must rake in $80 million.
So that means one of this company’s huge financial concerns is somewhat ameliorated. However, they still have to deal with possibly being de-listed from the stock exchange, those class action lawsuits, and probably major self-esteem issues.