American Apparel plans overhaul of attitude and operations
American Apparel Inc.'s new leadership believes that the retailer can someday become a $1-billion company — but only after an overhaul of its attitude and operations.
In its latest effort to disentangle itself from months of internal turmoil, the Los Angeles company Monday filed a plan with the Securities and Exchange Commission outlining where its stores should be based, who they’ll be targeting and how.
In another filing, American Apparel said it planned to form an advisory committee to help guide Paula Schneider, who became chief executive in January after predecessor and company founder Dov Charney was fired in December.
In an investor presentation titled “Chaotic to Iconic,” American Apparel said it would attempt to purge its marketing of the overt sexuality for which it’s known, while also tightening and better tracking its design and sales processes.
The company said it would avoid the “blatant sexual innuendo” and “inappropriate sexual poses” of its former advertisements, which often featured women with their legs splayed in a way that was “offensive to many.”
The company, which had $609 million in revenue and 242 stores at the end of 2014, said it hoped to evolve into an entity with $1 billion in annual sales. To do so, American Apparel said it planned to perk up its “stagnant retail product,” streamlining its offerings 30%, while improving its planning and communication to avoid costly overtime and overproduction.
The company said it has too many stores in New York and Los Angeles and that the rents for some foreign outposts are too high.
Looking ahead, American Apparel stores should be based in areas with high annual household incomes and more than 400,000 residents, with the exception of college towns, according to the presentation.
Stores, which range in size from 1,200 to 3,500 square feet, should be 2,500 square feet for stand-alone properties and 2,200 square feet for mall space, the retailer said.
American Apparel also said it hoped to increase its wholesale sales workforce and expand its international distribution network, particularly in Europe and Asia. The company said it aims to reduce its supply chain costs, paying more competitive prices for raw materials.
In a separate filing, American Apparel said shareholder Jeffrey Kolb agreed to withdraw plans to nominate two candidates to the company’s board. Instead, the retailer will set up an advisory committee that will be led by Kolb choice Gene Montesano, co-founder of Lucky Brand Jeans, if he is willing and able.
The company also promised to try to find a new independent director with retail management experience before the 2016 annual meeting.
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