It may have only been a few weeks since Gildan Activewear confirmed the acquisition of American Apparel, but the company already has big plans in mind for the Los Angeles-based clothing manufacturer.
American Apparel was founded in 1989 by Dov Charney as a wholesale business selling blank T shirts to screen printers, uniform companies and fashion brands.
Over time it developed to become a trendy apparel manufacturer aimed at a young audience, with a retail presence in both the States and in the UK. It also ranked as one of the largest apparel manufacturers in North America, owning and operating its own fabric dye houses, garment dye house and knitting facility, all based in Los Angeles.
After many years of struggle, controversy in the media with racy advertisements and not making a profit, American Apparel filed for chapter 11 bankruptcy for the second time in November 2016.
It was at this point that Gildan saw the perfect opportunity to extend its penetration of the fashion basics segment in the printwear market and submitted a stalking horse bid to purchase the company.
Integrating the brand
In February Gildan Activewear completed the purchase of American Apparel’s intellectual property and other assets for $88 million. Gildan also separately purchased inventory from American Apparel to ensure a seamless supply of goods into the printwear market while the brand integrates into its portfolio.
Despite it being early days, Glidan has already secured US-based contractors to make fabrics and sew garments for key American Apparel styles offered to the wholesale market. At the same time Gildan also plans to utilise its global manufacturing capabilities to produce certain American Apparel styles abroad, creating less expensive offerings that will be able to compete better for the business of price-conscious end-buyers.
Garry Bell, Gildan’s vice president of marketing and communication, spoke exclusively to P&P editor Melanie Attlesey at Printwear & Promotion LIVE! in February and explained further about the future of American Apparel.
He said: “Although it’s early days our initial perception is to bring the American Apparel brand into more markets internationally. We have already received quite a lot of interest from markets around the world to supply stock to, including Japan, Australia, China and Latin America.”
There are some obvious synergies between the Gildan and American Apparel brands; the most immediate being that they are both vertically integrated companies. This means that they both own the whole supply chain within their business.
Garry adds: “A key component of the American Apparel brand is its made in the USA philosophy. This is something that will be maintained. American Apparel has a great manufacturing heritage and this is something which appeals greatly to the consumer.
“There are other points which made this brand stand out to us including; owning its own factories in the US, the ongoing delivery of great fabrics and product innovations, great style, fits and silhouettes and edgy photography.”
Maintaining their voice
Garry explained that each of Gildan’s brands, Gildan, Anvil, Comfort Colors and now American Apparel, will maintain their own voice within the printwear market. American Apparel will be positioned as a premium brand within Gildan’s product portfolio, priced slightly higher than the similar Anvil range.
“We will be making some changes as the brand has faced some price competitiveness in recent years,” explained Garry. “The American Apparel range will be styled and fashioned the same way, but will now become more price centric, which is where Gildan’s operational expertise will be utilised. As one of the largest manufacturers of apparel in the world, over time we have developed our own expertise and efficiencies in our own factories, which we can integrate into American Apparel’s own factories.”
In addition to the manufacturing side of things, Gildan has already opened an office in Los Angeles, hiring some marketing and merchandising employees from American Apparel, which will help to ensure the seamless transition of the brand’s recognised unique, trendy, edgy style into future products.
“American Apparel has a really bright future as a strong brand in the international market. We are excited to take this brand to heights it has never been before,” said Garry.
At a recent conference call discussing Gildan’s Q4 2016 financial results, Rhodri Harries, executive vice president, chief financial and administrative officer, reiterated Garry’s comments.
He said: “We were pleased to emerge as the successful bidder of the auction with a final bid of $88 million. American Apparel is a strong brand with a premium positioning in the fashion segment in printwear.
“Our big challenge is obviously re-feeding the line and getting the supply line up and running. Customers have brought a lot of inventory, pre-bankruptcy to support the sales, and we should start shipping product towards the end of April and the beginning of May.”
The future is bright
While Gildan has a clear plan for the printwear market, Garry explained that Gildan has not yet formalised a clear strategy on how to bring the American Apparel brand to the consumer, for this acquisition meant the end of the American Apparel retail stores. He also added that Gildan does not expect to see any financial reward from the acquisition until 2018.
Reception to the American Apparel brand at Printwear & Promotion LIVE! was great. There was a lot of buzz around the products on display as it is obvious they provide a point of difference within the UK printwear market. A few questions were asked about what the acquisition meant for the future of the brand in the UK, but on the whole it was business as usual.
Currently garment decorators are encouraged to purchase products directly from authorised distributors, which here in the UK is Ralawise. And as Garry said – the future is looking bright for American Apparel.