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American Apparel CEO: Firings "Necessary To Protect The Financial Health" Of Company

Paula Schneider told staff today that almost 2% of the company's staff, about 180 people, will lose their jobs. Her memo noted the failings of "previous management," which oversaw more than $300 million in losses over five years.

Posted on April 1, 2015, at 3:39 p.m. ET

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American Apparel is laying off almost 2% of its workforce this week, a decision its CEO told employees is necessary to "protect the financial health" of the company.

The Los Angeles-based retailer, known for making clothes in the U.S., will lay off about 180 employees, The New York Times reported earlier. Chief executive Paula Schneider declined to say whether more layoffs will follow, according to the report. Schneider sent a memo to staff today, obtained by BuzzFeed News and included below, explaining the decision and saying it was "a very sad day."

The memo was sent at around 2 p.m. ET on Wednesday. According to the Times story, published just before 9:30 a.m. that morning, Schneider spoke to the newspaper late Tuesday and said the company had "begun telling affected employees" about the layoffs.

"This was a difficult decision for management, but one that is necessary to protect the financial health of American Apparel," Schneider, who started as CEO in January, wrote in the memo. "When I came to the company, we were producing over 4,000 different styles, many of which didn't perform well at retail. Therefore, we have made design decisions to make fewer styles. As a result, we've had to make some reductions in the operations area. We're also combining a few teams within the corporate offices so as not to duplicate efforts and work as efficiently as possible together."

The cuts are intended to help the company turn a profit again, she said, which is something American Apparel hasn't done on an annual basis since 2009. The chain will offer employees severance pay "directly proportionate" to the amount of time they've worked for the company.

American Apparel says its factory is the biggest sewing facility in North America, and it employs a largely immigrant workforce. (The memo also included a Spanish translation.)

The company has a new management team in place to redirect and reshape the provocative brand after firing founder and ex-CEO Dov Charney last year, though it has been encountering resistance from employees and from Charney, who is working to return to American Apparel. Last week, it reported sales slipped 4% to $609 million in 2014 and that it's thin on cash.

"This is a very sad day," Schneider wrote. "We've made these business decisions to preserve over 98 percent of the workforce. It is very challenging to go down this route, but we have to conduct business differently in order to thrive. Ultimately, our goal is to get as many employees as possible back to work full time."

Memo from American Apparel's CEO to staff. The email included a Spanish translation.

Memo from American Apparel's CEO to staff. The email included a Spanish translation.

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