American Apparel’s rebrand says a lot about life after bankruptcy

More than a year after American Apparel went bankrupt and shut down all 110 of its stores — a fleet that had bloomed to 281 locations during its heyday in the late aughts — the company is preparing to open a new shop. Just one, on Melrose in Los Angeles, the city where American Apparel made its name.

The neighborhood where the new store will live is “good for emerging brands,” says Silvia Mazzucchelli, American Apparel’s vice president of direct-to-consumer sales. But an “emerging brand” isn’t what most would consider American Apparel.

After going bankrupt twice, the company was bought by Canadian retailer Gildan Activewear in early 2017. When Gildan relaunched American Apparel later that year, its name was the same, but key aspects of its identity were missing; its guts were different.

American Apparel’s journey is a prime example of what can happen when a failing brand is sold for parts and restarted by new owners. Its collapse just predated a tidal wave of retail bankruptcies and store closings that began in early 2017, hitting chains like Macy’s, The Limited, and Payless. Some brands never came back up (Toys ‘R’ Us), and some (Nasty Gal) were purchased out of bankruptcy like American Apparel.

American Apparel is a good case study for this phenomenon; the brand has changed under Gildan in very clear ways. On a surface level, it looks similar to what it was before: The brand still sells its most iconic styles, and its Instagram still features the high-flash photography for which the brand was known (though its newest photos lean more toward soft, natural light). But two of American Apparel’s most defining qualities have been altered.

Its tone, once cheeky and fairly smutty, has been transformed into a message of empowerment — the idea is that shoppers can still look sexy in a bodysuit or colorful, skintight pants, but on their own terms. And American Apparel, once a champion of domestic manufacturing, is no longer wholly made in America.

American Apparel

American Apparel

To explain why American Apparel has changed in these ways, it’s important first to understand its business, which is bifurcated into a collection of fashionable basics sold directly to shoppers and a range of “blanks,” styles like T-shirts and hoodies that are sold to screen printers. The latter is the core of Gildan’s $2 billion-plus business, too, and though it considered shutting down American Apparel’s direct-to-consumer wing, it kept it open because it gives the wholesale operation some extra shine.

“They were not going to bring back the consumer space. They were just going to keep printwear,” says Sabina Weber, American Apparel’s vice president of marketing. “But [Gildan] soon realized that without the brand, you have just a T-shirt. Everybody sells a T-shirt.”

Having a strong brand means you can sell a blank T-shirt as a premium product. That’s assuming, of course, that American Apparel hasn’t lost its touch with shoppers.

This is the latest in a series of relaunches for American Apparel

The company’s story starts with blanks. Dov Charney, a Canadian, founded American Apparel as a wholesale T-shirt business in 1989, but it wasn’t until the brand started growing its direct-to-consumer business in the hipster days of the early ’00s that it became a full-fledged cultural phenomenon. American Apparel was known for colorful wardrobe basics, a strict practice of manufacturing in the United States, and ultra-sexualized advertising imagery.

Under Charney’s direction, its sales rose from $80 million in 2003 to $250 million in 2005 and $634 million in 2013, though by that point it hadn’t turned a profit in years, the LA Times reported.

High energy and outspoken, Charney was an unconventional CEO in every way. For a long time, he managed to hang onto his business despite a reputation for inappropriate behavior. That reputation was magnified by a 2004 article in Jane magazine saying that he masturbated in front of reporter Claudine Ko, and it resulted in a string of sexual harassment lawsuits.

Mark Ralston/Getty Images

American Apparel’s series of rebirths began in 2014, when Charney was removed from his role as CEO after an investigation found that he had mismanaged funds and knowingly allowed an employee to post nude photos of a female staffer on the internet.

Charney stayed on as a consultant to American Apparel after his firing, and waged a legal battle for control of the company. In December 2014 he was fully terminated and replaced by Paula Schneider, a former executive at BCBG Max Azria.

So began one attempt to make over a company with a tarnished reputation and slumping sales. But in October 2015, American Apparel filed for bankruptcy, weighed down by debt, and a year later, Schneider too was heading out the door. (She is now CEO of the Susan G. Komen Breast Cancer Foundation.) In November 2016, the company filed for a second bankruptcy. That year, Charney founded another basics brand called Los Angeles Apparel.

The latest and current phase of American Apparel’s life began in January 2017, when Gildan Activewear acquired the brand’s intellectual property out of bankruptcy proceedings for $88 million. That purchase also included “certain manufacturing equipment,” but the real value was in American Apparel’s name.

Victoria Jones/Getty Images

After the acquisition, all of American Apparel’s stores shut down, but the brand wasn’t dead. It relaunched its website in August 2017, and though it looked very much like the old American Apparel, it was Gildan under the hood. The company’s first order of business was offering e-commerce customers the option to choose between products made in the US and cheaper, identical pieces manufactured abroad — a radical shift from American Apparel’s original manufacturing ethos.

When Boohoo acquired and rebooted the bankrupt Nasty Gal, it, too, looked fairly similar on an aesthetic level. But one thing made it abundantly clear that the brand had changed hands: Numerous people who had purchased items during the ownership transition found that their credit cards had been charged but no order had been shipped, and they went off on Nasty Gal on social media.

The company’s response, via Twitter: “The new owners are not liable for refunds. We do advise you contact your bank and request a chargeback.”

Crafting a new identity for American Apparel: empowered, digital, and globally made

Today, American Apparel’s design, marketing, merchandising, sourcing, and production teams work out of a building in an industrial section of LA, not far from the company’s former factory and headquarters. The open-plan office on the upper floor is scattered with relics pulled from the brand’s old home: a sign capped by a silhouette of a woman’s legs, and neon lights arranged into the form of three women in various gymnastic poses.

Downstairs is a photo studio where, in mid-July, the house photographer was reshooting e-commerce photos. The models had looked too stiff in the first set of pictures, and since American Apparel has no stores right now, the team decided they needed to do them over to show more movement and angles. American Apparel has made no commitments yet to establish stores beyond the Melrose location, which opens in December, but even one storefront will give the company a much-needed chance to woo customers in real life.

Mazzucchelli envisions the Melrose space as having the same design DNA as American Apparel’s now-shuttered stores — it will likely use some kind of grid wall display system, a hallmark of the old brand — and she stresses the importance of it looking uncluttered. Negative space signals confidence; every minimally-stocked luxury store knows that.

Standing at the island in the American Apparel kitchen, Weber laid out images for a campaign for nude bodysuits that launched in early September. The pictures showed a diverse bunch of women wearing leotards in nine different shades of nude — eight more than American Apparel used to offer, Weber says. Following in the footsteps of brands that make lingerie for shoppers of all skin tones, American Apparel is trying to be more inclusive.

It’s also attempting to disassociate itself from what Claudine Ko called “kiddie-porn-like ads.” Weber says that when American Apparel puts out open casting calls, it’s looking for models over 21.

“I mean, we’ll still feature models that are 19 or 20. It’s not a hardcore rule,” she says. “But in general the brand previously showed girls that were quite young, and there was an uncomfortable component to that, and there’s no need for it.”

American Apparel

Weber joined the brand more than two years ago, right before it headed into bankruptcy, and managed the messaging around the store shutdowns while looking for other work. She was hesitant when Gildan asked her to stay on through the acquisition, but, she says, she loved American Apparel.

“When I had the chance to bring it back, I was like, ‘Fuck it, I’m going to do it,’” Weber says.

Her vision for the new American Apparel is a tricky thing to pull off. It’s not over-sexualized, but it’s still sexy. It’s about empowerment and women owning their sexuality. It’s not about shooting models from angles that look overtly predatory. Throughout the summer, American Apparel still used the lo-fi, direct flash photography style that’s synonymous with the brand’s earlier, more controversial days.

“It’s very uncanny valley,” says Julie Robinson, a 29-year-old freelance fashion designer and former American Apparel obsessive (she hasn’t bought anything since the relaunch). “It’s the same, but it does feel a little different.”

For its fall collection, however, American Apparel shot models in outdoors, against the backdrop of concrete buildings and misty lakeside docks. It’s a simple change, but one that signals a broader transition in the brand’s identity.

There is a lot of carryover from American Apparel’s old product lineup, because despite the company’s various scandals, people have strong attachments to their “Easy” jeans and zip-up hoodies. For the first year of its life under Gildan’s management, American Apparel focused on putting out its classics, which is just as well because the few new pieces it introduced, like a crinkly nylon jacket, didn’t sell at the same level.

Weber chalks that up to customers not being able to see and touch those products in stores. (She really can’t wait for American Apparel’s first location to open later this year.) Still, the fall collection brings a lot of what those in the retail business call “newness,” like a twill jumpsuit, a trendier bell-sleeve fisherman sweater, and a mixed modal turtleneck that the team told me would be the softest thing I’d ever touched. It was very, very soft.

Then there’s the decision to no longer manufacture entirely in America. That was “the most difficult of transitions, or the one we thought about the most,” says Mazzucchelli.

American Apparel’s test of shoppers’ desire for goods made in the US — giving them the option to buy a $22 tee made in America or a $18 “globally made” tee — resulted in the finding that most people would rather buy the cheaper option.

“We came to the conclusion that the ‘American’ in American Apparel is not necessarily a place,” says Mazzucchelli, who joined the company in January 2016. “Customers care that we are ethically made and sweatshop-free. They don’t really care if we are ethically made in China, in Mexico, in Honduras, in the US, or in France.”

A Guardian report from November 2017 paints a very different picture of how workers are treated in Gildan’s factories, citing complaints dating to 2004. Those included “mandatory work shifts longer than the legal maximum limit, illegal dismissals of employees involved in unions – including the dismissal of a pregnant woman, as well as consistent harassment and verbal abuse targeted at employees.”

American Apparel does still make some of its clothing in the US. Sometimes the best factory for a product category is located domestically; Vivi Tran Lynch, American Apparel’s former sourcing director, said in July that the brand uses a swim vendor in LA because it delivers the right combination of quality and price. (Lynch has since left the company for the clothing brand Self Esteem.)

But it’s also because screen printers like to be able to offer their customers — sports teams, fire departments, bands — a made-in-America option. If not for the everyday shoppers, American Apparel has to do it for its wholesale customers.

That’s the thing about brands that go under and return, zombie-like, in an altered state. Companies are mutating all the time, shutting down departments that aren’t financially viable and discontinuing products that don’t sell. But when a brand is bought out of bankruptcy, though, it becomes eminently clear what portions of its business still have value, because that’s all that’s allowed to live on.

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