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BUSINESS American Apparel Fights For Survival With New Plan American Apparel plans to cut $30 may be cautious to wade into the legal The Gores Group, BCBG Max Azria and million in expenses, trim work- mess. The company says it will fight the Laundry by Shelli Segal. force, shrink store size and launch lawsuits, but doing so could prove to be a Schneider’s been steadily reshaping a new fall clothing line. distraction. the executive team at American Apparel. Paula Schneider, who joined the com- The new additions to the company’s lead- BY DEBRA BORCHARDT pany as ceo in January, said, “We are ership team include Christine Olcu as committed to turning this company general manager of global retail and Brad The troubled American Apparel Inc. around. Today’s announcements are nec- Gebhard as president of wholesale. Olcu said it might not have enough money to essary steps to help American Apparel is tasked with improving store productivi- survive for the next year and could have adapt to headwinds in the retail industry, ty and Gebhard, who has been working in to raise additional capital to stay alive. preserve jobs for the overwhelming ma- the capacity as a consultant will oversee The company known for the sometimes jority of our outrageous behavior by founder Dov 10,000 employ- Charney said it has embarked on a turn- “Even if American Apparel increases revenue ees, and return and cuts costs, there can be no guarantee around plan that includes cutting costs the business to and new executive appointments. long-term prof- that the company will have sufficient financing American Apparel plans on cutting itability.” commitments to meet funding requirements $30 million in operating expenses by Lloyd Greif for the next twelve months without raising closing underperforming stores, shrinking of Los Angeles- store size, cutting payrolls and trying to based invest- additional capital.” enter more profitable markets. It is also ment banking — American Apparel statement launching a new fall merchandise line firm Greif & with the hopes of increasing revenue. Co., said: “They can talk about cutting the imprintable business and the recently But the company warned that it might costs, but layoffs alone won’t do it. They acquired specialty retailer Oak. also need additional capital. need to move jobs offshore and they American Apparel has never focused “Even if American Apparel increases haven’t done that.” on the fall selling season and it remains to revenue and cuts costs, there can be no American Apparel, however, has be seen if students will respond to new guarantee that the company will have vowed to stick by the Made in America styles for the back-to-school season. Oth- sufficient financing commitments to meet approach that helped the company build er basics-oriented retailers, such as Joe funding requirements for the next twelve its brand. Fresh, have also picked up market share months without raising additional capital, “Their biggest issue is declining sales and pressured American Apparel. and there can be no guarantee that it will and who says people will buy the new fall The company, though, is not giving up be able to raise such additional capital,” line?” Greif said. “They need access to without a fight. the firm said in a statement. capital. But who would want to get in- “Our primary focus is on improving American Apparel stock dropped 8 volved? There’s too much risk and the the processes and product mix that have percent to 46 cents on the news and is new leadership doesn’t have the degree of led to steep losses over the past five down nearly 65 percent from its 52-week turnaround experience one would have years,” said Schneider. “Our customers, high. The market hates uncertainty and hoped for.” employees and local communities around with approximately 20 different lawsuits Before joining American Apparel, the world believe that American Apparel and administrative actions initiated by Schneider held senior roles at Warnaco, is an iconic brand that deserves to suc- Charney and his associates, investors ceed. My job is to make that a reality.”