The rise and fall of American Apparel

Like many entrepreneurial success stories, the story of American Apparel begins in a student dorm room in Montreal. By the time the company was founded, Dov Charney had already had several failed projects, but he was nevertheless determined to make clothes. Armed with this determination, he began to work despite the failures, and as a result, almost three decades later the company he founded has become one of the most popular names in the world of mass-produced clothing.

Brave Tailor.

Charney became interested in the world of ready-to-wear as a student when he began importing goods from the United States to Canada in 1987. He was beginning to excel at importing brands such as Hanes and Fruit of the Loom, and in a 2008 interview, he said he began importing 6,000 to 10,000 T-shirts into the country, which were delivered to him through a courier company.

His efforts as a clothing importer would continue to support him during his time at Tufts University. But Charney has far greater ambitions than to act as an intermediary between manufacturers and consumers in the local Canadian market. So, after years of learning about the specifics of the industry, in his third year he decided to go into garment manufacturing on his own. His first attempts were made in his own dorm room, but Charney quickly realized that this limitation prevented him from developing normally. For this reason, he left Tufts University and headed for South Carolina, where he had already decided to develop his business.

To start his business, Charney received a $10,000 loan from his father. The stay in South Carolina, which began with the founding of American Apparel, would last for years, during which time the company worked with its partners. Initially, American Apparel had no manufacturing facilities of its own.

Wholesale success.

The company sold its T-shirts to various wholesale partners, including other fashion brands. But success was far from immediate, although Charney knew the market well. In fact, it took American Apparel more than seven years before some of their brands became hits with consumers.

The honor belongs to the Classic Girl line, which was launched in 1995 and two years later the company had a new production facility. The plant is located in Los Angeles and covers an area of 72 thousand square meters. The whole range of operations necessary to create the final product is performed on the territory. In fact, at the beginning of the company’s operations, its main focus was monochrome T-shirts, which were extremely easy to place images on.

The rise and fall of American Apparel
Liverpool, England — February, 19 2011: The sign of American Apparel shop in Liverpool. American Apparel is the largest clothing manufacturer in the United States.

But even at this stage of its existence, the brand, though not popular with end users, began to attract media attention. The reason for this is Charney’s management philosophy that his business should provide a reasonably good living environment for his employees. To put this concept into practice, the entrepreneur began paying salaries, bonuses and social security contributions that were significantly higher than the industry average.

Later in its history, the company would begin to appeal to consumers with its aggressive marketing, in which models were photographed wearing only socks or underwear, and in the middle of the first decade of the new century American Apparel would introduce a campaign in which models were naked to the waist. But that’s in the future, and before it happens, Charney’s business will go through a lot.

American Apparel is focused on all users.

The company’s first step toward reaching end users was the launch of its corporate Web site in 1999, followed four years later by its first physical location on Sunset Boulevard in Los Angeles. This approach has been particularly successful, and in less than five years American Apparel has nearly 150 stores in 11 countries. At the same time, the company has already expanded its product line, and in addition to clothing, its stores also offer accessories for women, men and children.

The expansion is no accident — consumers are in love with the style imposed by the company. That’s why the company’s revenues began to grow rapidly, and in 2005 it was named one of the 500 fastest-growing companies in the United States. At the time, the revenue growth rate for the three fiscal years exceeded 440%, and revenue in 2005 was $211 billion.

The bankruptcy of American Apparel.

By the end of the decade, when the company was already listed on the stock exchange, its position was no longer so rosy. It turns out that the data in the fashion giant’s financial report was falsified in 2010, as the company began experiencing a crisis a year earlier. The decline in sales would lead to a de facto bankruptcy in 2015, when the company would be unable to repay more than $60 million in debts to creditors. Charney has been ousted as CEO of the company he founded more than a quarter century ago.

In 2017, American Apparel. executives sold the brand for $88 million. It has since been owned by Gildan Activewear, and while American Apparel still remains, the company currently has no known brand in the market.

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