American Apparel Plans to Close down Its Underperforming Stores
Struggling teen clothing retailer American Apparel revealed a restructuring plans to reduce costs. The company also warned that it could be quite tough for it to meet funding requirements within coming 12 months.
The company, which is being sued by founder and former CEO Dov Charney, said on Monday it would cut jobs and close stores to slash costs by about $30 million over the next 18 months.
Schneider has made several changes in the company since it took the charge in January. Some major changes include revamping its edgy and oft-maligned marketing strategy, remaking the organization's management structure, and bringing in more stringent forecasting and budgeting processes.
Shares of American Apparel plunged 10.2 % to 45 cents in late-afternoon trade on the New York Stock Exchange.
American Apparel said that the $30 million cost cutting would be completed over the period of next 18 months. American Apparel's headquarters in downtown Los Angeles has also been major site for protests by workers that are unhappy about furloughs and reduced hours.
"Going forward, the company will look to add new stores in profitable fast-growing territories while reducing its footprint in unprofitable and over-saturated markets. We are committed to turning this company around. Historically, fall season has not been major focus for the Company", the company said.
American Apparel reported a net earnings loss of $26.4 million in the first quarter and a 5% decline in same-store sales.
The company did not say how many employees it would lay off, but a Monday's press release it said that it is seeking to preserve jobs for the 'overwhelming majority' of its 10,000 employees.