Once-iconic US brand American Apparel has filed for bankruptcy, leaving thousands of Australian customers wondering if they’ll ever receive their purchases.
It’s the second time the company has claimed bankruptcy in just over a year and spells the closure of its three Australian stores – in Melbourne, Sydney and Adelaide – which have been placed into voluntary administration.
On Tuesday, visitors to the Australian American Apparel website were told to direct questions about “pending orders” to Sydney-based administrators McGrath Nicol, who did not respond to requests for comment.
Paul Greenberg, head of the National Online Retailers Association (NORA), said he had “a bad feeling” customers who ordered before the announcement would not receive their goods.
There was also concern for customers with unredeemed gift cards – in a similar scenario to the closure of Dick Smith earlier this year.
Consumer law expert Josh Simons of firm Thomson Geer said Australian customers did not have much choice but to wait and see whether the company would be sold off or join an ever-expanding retail grave.
Gildan deal could save brand
In a statement, Canadian brand Gildan Activewear Inc. announced it had offered $66 million ($A87 million) for the American Apparel name, inventory and some of its factories, but not its retail stores.
A purveyor of relatively unsexy basics, Gildan is best-known as the company behind rapper Kanye West’s merchandise.
Mr Simons said the Gildan deal could ensure American Apparel kept operating and Australian customers’ rights weren’t affected, but it was too early to tell.
He said customers’ ability to pick up lay-bys and use gift cards was affected, and “there’s no harm going into a store and trying to exercise your rights, but customers will probably have to just sit tight and see”.
American apparel is leaving Australia now they can take their overpriced children sized clothes elsewhere 😊😊
— Maddy kazakovski (@madisonkaz) November 11, 2016
What went wrong?
The Los Angeles-based brand has endured a tumultuous few years, including criticism over its sexually-charged advertising, the forced removal of its founding CEO and accusations of poor treatment of workers.
American Apparel quickly gained attention for depicting young models in often sexualised poses, and in 2009 had a print ad banned in the UK for sexualising a girl who looked like a child.
Yet the brand was also praised for including – and not airbrushing – blemishes, and for featuring an array of body types on its billboards.
It was that definitive American Apparel look that gave the brand its edge, and was eventually lost when management changed hands.
The NORA’s Mr Greenberg said American Apparel had lost its unique appeal or “story” when it forced out CEO Dov Charney over allegations of misconduct in 2014.
“Having a crazy founder isn’t necessary a bad thing,” he said.
“I’d argue that something was lost in the corporatisation of the business.”
Following American Apparel’s first bankruptcy claim in 2015, it was decided the brand should concentrate on basics, but Mr Greenberg said it had proved a market too hard to crack.
“If you start playing the basics game, you’re up against Kmart, H&M and Zara,” he said.
“The good retailers seem to be finding a little bit of spark from doing something different.”
American Apparel is filing for bankruptcy again. The good news is that they're only two more bankruptcies away from running for President.
— Nick Jack Pappas (@pappiness) November 14, 2016
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