American Apparel, which has been struggling in the wake of a massive management overhaul last year, said today that it will close stores and cut jobs in an effort to save money.
The retailer, which didn't specify how many stores will be cut or how many jobs will be "streamlined," said the moves will help reduce operating expenses by $30 million in the next year and a half. It's also hoping to boost revenue with a special new fall line, according to the statement.
Yet the company, whose stock tumbled to 45 cents a share on Monday and is down 56% this year, is in a risky place. "Even if American Apparel increases revenue and cuts costs, there can be no guarantee that the company will have sufficient financing commitments to meet funding requirements for the next twelve months without raising additional capital, and there can be no guarantee that it will be able to raise such additional capital," it said.
It's the latest bit of bad news out of the company, which laid off about 180 people in April amid declining sales. American Apparel said in today's statement that it has been fending off about 20 lawsuits and administrative actions out of founder Dov Charney and "his associates," which it believes are "meritless."
Charney, 46, was officially fired in December after an investigation into his conduct that began last summer, but has refused to give up his fight to return to the "Made in USA" clothing company he founded in the 1990s.
The court battles between Charney, American Apparel and hedge fund Standard General, which is now overseeing the company, have gotten heated: last month, American Apparel published salacious X-rated text messages allegedly sent by the former CEO to a number of staff members. And Charney has shared previously unseen messages outlining his dealings with Standard General's employees, who he claims tricked him into giving up control of the company.
In the meantime, American Apparel has been working internally to make the provocative brand more innocent, telling Quartz recently that it wants to "sell clothes, not body parts." The retailer filed an investor presentation with the SEC last month that outlined its plans to "recast the brand in a positive, inclusive, socially conscious light," that captures the "millennial spirit."
American Apparel CEO Paula Schneider said in today's announcement that the changes are "necessary steps to help American Apparel adapt to headwinds in the retail industry, preserve jobs for the overwhelming majority of our 10,000 employes, and return the business to long-term profitability."