Struggling retailer American Apparel Inc. has said that it will close its non performing stores and may need to raise additional capital over the next year even as it embarks on an aggressive cost-cutting plan to help it end five years of losses.
It is seeking to save US $30 million over the next 18 months through various measures including closing stores and laying-off workers. The company had 239 stores, of which 135 were in the U.S., as of the end of March 2015. Though it is not clear how many employees would lose their jobs, but a recent press release of American Apparel said that it is seeking to preserve jobs for the overwhelming majority of its 10,000 employees. It said, “There can be no guarantee that the company will have sufficient financing commitments to meet funding requirements for the next 12 months without raising additional capital. There can also be no guarantee that it will be able to raise such additional capital.”
The company is defending itself against 20 lawsuits and administrative actions initiated by Charney and his associates. In addition to the cost-cutting measures, American Apparel plans to initiate a new fall merchandise line, a first for the retailer, and has hired two executives to help improve its supply chain and retail operations.
