American Apparel has closed 12 out of 13 of its UK stores with the last remaining store, in London’s Camden, set to close in January.
The UK arm of the US brand was placed into administration last month shortly before its parent company agreed a sale of the brand to Canadian group Gildan. The US business was itself been placed in Chapter 11 bankruptcy protection for the second time in a year while the deal was completed.
While Gildan has agreed to buy the brand name and certain assets, as well as some product inventory, it did not want any of the American Apparel stores of which there are 230 (about half of which are in the US).
The UK stores affected were mostly in London with additional stores in Brighton, Bristol, Leeds, Nottingham and Glasgow. They were traded through to Christmas as expected “to sell the stock and realise value for the creditors” said Jim Tucker of KPMG who is joint administrator.
Over in the US nine underperforming stores are due to close after the company received permission to do shutter them from a bankruptcy judge. The stores, in locations including Washington, Seattle and Atlanta, were not seen to be adding any value to a possible sale of the retail business.
American Apparel remains hopeful at least some of the remaining US stores can be sold but any left unsold in a bankruptcy auction next month will be close by the end of April.
Los Angeles-based American Apparel has endured a chequered past. It first entered Chapter 11 a year ago following a legal dispute with founder Dov Charney who was the subject of allegations of misconduct including sexual harassment. Charney, who founded the business as a student in 1989, was dismissed in 2014.
Charney’s ethos had been to promote US manufacturing and ethical production practices; American Apparel products proudly displayed the Made in the USA label. While the approach initially worked, when young consumers tightened their belts as a result of economic downturn in 2008, the business suffered falling sales and debt.