The American Apparel founder could be about to salvage the near-bankrupt brand, as he bids to regain control of the LA label
On the back of their file for bankruptcy in October, we thought American Apparel was headed down the drain. When this time exactly a year ago founder Dov Charney was ousted from the company, it seemed the brand had lost its notorious – if not incredibly controversial – CEO, distanced even more so from the brand when they had to take out a restraining order against him for negative comments to the press. Yet, just in time, Charney has jumped back onto the scene in alleged bids to buy the brand back out, according to a report by WWD.
The troubled brand has never been far from headlines regarding its financial state since it stopped turning a profit in 2009. Lately it’s been a slippery slope, with the company reporting an estimated net loss of $64.54 million (£43.2 million) in their third quarter financial results, up from $40.86 million (£27.34 million) last year. This October, the company were forced to file for US bankruptcy protection, with the impending date set at January 20th. Charney’s replacement CEO, Paula Schneider, had looked positively upon the company’s planned restructure, believing it would “enable American Apparel to become a stronger, more vibrant company,” and has meanwhile been focusing upon a widened product assortment for the brand.
But then came Charney. As we near the end of this window before its restructure, the former CEO has seized his last chance to get back on board, apparently joining forces with two to three groups to submit non-binding bids for the company. Although exact figures for these offers are yet unclear, the company has been valued at an estimated $180 million (£120.5 million) and $270 million (£180.7 million) in a recent analysis. Despite the restraining order that’s been keeping them apart, Charney seems confident in his ability to take it back on, having revealed earlier this month that he's partnered with financial advisers to explore his prospective purchase opportunities.
According to one insider source, Charney is working nonexclusively with more than four parties, one reportedly a private equity firm. Another source has also confirmed that American Apparel entered into talks with at least one of Charney’s parties on Wednesday after they signed nonbinding letters of interest. This interest has allegedly granted them access to the value of potential offers and the ability to review the retailer's financial documents. Charney and his advisers have declined to comment on these latest developments.
A spokeswoman for American Apparel has said that there is currently no progress on a potential bid, nor a transaction to consider. She did, however, confirm that “indications of interest have been submitted”, and that the company always evaluates such indications of interest equally.
With controversy at the heart of the brand’s reputation and marketing, perhaps the original founder Charney could be the company’s unconventional saving grace.
