However, the brand of American Apparel will continue to exist, and the whole company will continue to operate -- reach an agreement with 95% of creditors, convert more than $200 million of bonds into sufficient new company equity, and with the legal support provided by relevant laws and regulations of bankruptcy protection in the United States, American apparel has the opportunity to continue normal business activities.
American Apparel used to be the fastest growing fast fashion brand in the United States. With the eye-catching Xing suggestive advertisement (pinyin please understand by readers themselves, this word is afraid of wechat blocking), American app quickly accumulated fame, once the favorite shopping place for American teenagers. In the first six years after the start of physical store operation, it opened 450 stores around the world.
But with sexy marketing no longer working and the heavy financial burden of too many physical stores, American Apparel's bankruptcy was first reported in 2010. During the year, Deloitte, the auditing firm at that time, also broke out in its financial report fraud scandal. In 2014, the founder of the company, Dov Charney, was involved in the Xing invasion scandal, which severely damaged the company's image and made its financial performance worse.
Since 2010, the company has accumulated a total loss of 338 million US dollars. Since the second half of 2014, the company has pulled down its scandal stricken founder and CEO, planned to close some stores and streamline business to reduce costs, and decided to abandon the sexy route to attract young consumers. But the company's operating conditions have not improved significantly - the company still made more than $90 million in losses in the first half of 2015, with its share price falling to 11.2 cents as of October 2.
Advertising is a new way. AA models are all amateurs, mostly from AA's own company or some consumers. The shooting place is chosen in AA's office area. The shooting rules refer to Playboy's style in the 1970s-1980s, which makes people feel sexy but not unreachable, just like your neighbors or colleagues, friends or classmates around you.
The promotion is targeted. When entering a city to open a franchise store, AA will not choose mass media, but select a featured niche free magazine to advertise, or send advertisements on the local influential blogger website.
The sales promotion of the shop is powerful. Although the products sold are basic in style, they are rich in color. The shop assistants all have style. The owner of AA will interview every shop salesman. If there is no style, they cannot be employed.
Speaking of this, we have to mention the founder of AA, Dov Charney, a Canadian who started to buy Hanes T-shirts in the United States and sell them in Canada, and he has an indissoluble bond with T-shirts. Prior to the establishment of AA, Dov had been engaged in T-shirt wholesale business. The market space he looked for was that many enterprises could not buy basic T-shirts with good quality and can print. Up to now, T-shirt wholesale still accounted for a large share of AA, especially the basic white and black ones.
It can be said that Dov is a lunatic. For example, he asked his girlfriend to model with him in the advertisement, even his bare buttocks. He also promoted some avant-garde Xing concepts in the company. As for the XX words he often said, he even caused lawsuits from several former employees.
The employees of AA enterprises are younger, most of them are 20-30 years old. Because of their youth, innovation seems to be easier. The development of enterprises has been on a different path, and even up to now, there are still no standardized processes, systems and standards in management.
On March 13, 2009, American Apparel almost filed for bankruptcy, the website of New York magazine reported. The chain had to renegotiate the terms of its debt, or raise $16 million.
Fortunately, American Apparel got a $80 million loan in the middle of the night to avoid bankruptcy, and immediately paid off $51 million in debt and fines. With a $60.6 million loan from Bank of America, they have breathing space, which is tied to other debt.
Despite its aggressive expansion and good sales, american apparel has been struggling financially for months. Starting in December, the company's founder and CEO, Dov Charney, had to borrow $6.5 million from his personal account for the circulation of goods and the opening of new stores.
So who saved American Apparel at the last minute? It's British. Lion capital, a private equity firm based in London. Investors include orangina Schweppes, British cereal maker weetabix and US chip maker kettle foods.
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