Marketing- Amercian Apparel

1. Introduction
1.1. Dov Charney Brief Biography
1.2. History of American Apparel
a) How, where it was started
b) The idea behind it, inspirations

2. The Issue
American Apparel is a company of paradox. It has started progressive initiatives that have had a
positive impact of the manufacturing sector of the apparel industry. It has also been chastised
for bad hiring practices and it is estimated that Dov Charney has been sued for sexual
harassment six times. It has been innovative in it's advertising and has been able to differentiate
itself from the competition, carving out specific market niche. However, it's advertising has also
been criticized for it's oversexed,“amateur porn” look and use of young girls. When it came
time to file it's second quarterly reports, after overcoming obstacles like 2000 illegal immigrant
factory workers and it's auditors quitting, American Apparel was so late they were almost
kicked off the stock exchange. And, in their third quarterly report, American Apparel reported a
net loss of over nine million. They stated that in fact, they did have doubts about whether they
were going to be able to continue as a company, they may have to file for bankruptcy. American
Apparel accepted an investment from Lion Capital and they were bailed out by the company
however, they are under contract to produce certain revenues.
To increase profits, American Apparel has said that they plan to veer away from the image they
have created and are trying a new “preppier” approach. In addition to this, Tom Casey, Acting
President, added: "We expect to improve financial results by supporting the brand with a
customer-focused supply chain, leveraging our speed to market capability with lower
distribution costs. We are optimizing our retail store base through investments in technology
and improved allocation while lowering our lease costs."

The Debate: Knowing all the rumours and by hearing the facts, can or should we classify American
Apparel as a good or bad company?
Can we classify them as being successful or unsuccessful, why?
Are they still relevant, are they a passing phase?
Do you think they will overcome this obstacle? What do you think of their plan- will it work? Why or
why not?

The good:
American Apparel started as a small company selling wholesale t-shirts and expanded to
a vertically integrated, sweatshop free operation manufacturing and designing their own brand. The
clothing is uniquely recognizable and is ingrained in popular culture.
• In 2008, The Guardian labelled American Apparel the “fashion sensation” of the year
• Dov Charney was awarded the 2008 “Retailer of the Year” from the Micheal Awards
• In January 2008, The Intelligence Group listed American Apparel as the second top trendsetting
brand
• In February 2008, Brand Keys Inc. made a list of top retail apparel brands, AA tied second place
 with H&M
• April 2007 Women's Wear Daily published a list of top trusted brands, AA came in 8th
• Reported $545 million in TOTAL SALES in 2008

American Apparel has expanded at a rapid rate. The first rough sketch of AA came about in the late
80's. However in the mid 90's AA filed for bankruptcy. Dov was not discouraged and the next year, he
started a new version of AA and it was reincarnated as a wholesale company. In 2003, they moved into
retail. Since 2003, they have opened more than 280 stores in 20 countries and employ apx 10,000
people.

American Apparel and the community:

– lobbied for gay and immigrant rights with “Legalize LA” and “Legalize Gay” apparel
– promotes sweatshop free and environmentally friendly labour
– has a benefits package for employees
– garments donated to local charities

• The Brand Recognition, Market Growth

The Bad:
Basically we want to answer, “What went wrong”
Should include:
- description of the events and issues that lead to the falling revenues, falling popularity and any rises
in expenses in