Because You're Ugly: American Apparel Financial Woes?

Is Dov Charney's American Apparel empire in trouble?

As of Nov. 30, American Apparel employed over 10,000 people and operated more than 240 retail stores in 19 countries. The label is known for their fair wages–and tiny track shorts and slightly pornographic adverts–at its factory in downtown Los Angeles, workers make $12.50/hour plus benefits, which is something like more than twice what sweatshop employees make.

But American Apparel announced yesterday that they received a three-month extension on its outstanding debt that was set to mature in January. Charney commented, “We are pleased to have secured these extensions to our loan maturities given the current difficulties in the credit markets. We have also had discussions with our lenders about the possibility of lengthening the maturity of our debt into 2010, and we will continue these discussions while we pursue other financing alternatives.”

Charney continued, “Our business has remained encouraging during the holiday season. We are set to close out a strong 2008 for American Apparel, in which we expect to have opened at least 80 retail stores and to have reported a double digit same-store sales increase over 2007. Most importantly, we look forward to continuing to enhance the productivity of our retail stores and drive free cash flow in 2009.”

Friends tell us that dozens of sewers and employees were laid off just earlier this month at American Apparel corporate headquarters.

American Apparel's massive popularity with the hipster/youth sect has survived and continued to thrive despite the perma-controversy swirling around their hyper sexual ads, five sexual harassment lawsuits and even CEO Charney whipping it out in front of a journalist once–but can they survive this recession?

Vickie Chang

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