Amazon, Forever 21 Reportedly Bidding For American Apparel
Amazon and Forever 21 are bidding to buy up American Apparel, sources told Reuters.
The auction of American Apparel comes on the heels of its bankruptcy filing in November. After the filing, Canadian clothing manufacturer Gildan (you may have owned one of their anonymous t-shirts or sweaters) agreed to a tentative, $66 million deal to buy the company's brand and inventory, including an option to keep manufacturing and distribution in California. Gildan's deal, then, is the benchmark that the other companies will have to surpass for a successful bid.
The bar of $66 million isn't all that much to Amazon, which has about $12 billion in its pocket. But why would they want to buy up a company that has been plagued with problems in the past few years? As noted at Business Insider, American Apparel's "Made in the USA" motto may be a selling point for Amazon, as President-elect Donald Trump has been publicly denouncing companies for outsourcing jobs (he’d recently scared Ford from building a manufacturing plant in Mexico). It should also be noted that Trump had been a vocal critic of Amazon during his Presidential campaign—he claimed, among other things, that Jeff Bezos was using the Washington Post, which he owns, to get tax write-offs. Which is all to say that American Apparel, which claims to be the largest clothing manufacturer in North America (and with 4,500 employees under their name), may be an appealing buy for Amazon.
It's not just a matter of businessmen duking it out. American Apparel is a major employer in the Southland. The company has upwards of 3,500 workers in Southern California, with at least 2,100 of them working in its L.A. headquarters. This year alone, the company laid off at least 500 people as it cut production, reports the L.A. Times.
Currently, there is no guarantee that the winning bidder will agree to keep jobs and manufacturing in Southern California. Gildan reportedly has reportedly agreed to keep some of the facilities in California, but it remains to be seen what the exact numbers are. What complicates matters is that California is, relatively, a costly state to do business in—according to one report, around 10,000 companies had left the Golden State from 2008 to 2005 in order to cut operating costs.
The auction (and bankruptcy) isn't the only bit of bad news that American Apparel has faced in recent times. In fact, this is their second time filing for bankruptcy. Also, CEO Paula Schneider stepped down in September, with former CEO Dov Charney (who originally was kicked out after it was alleged that he was harassing employees) mocking her over the resignation. And it was reported in 2015 that the company was $300 million in debt.
So, uh, buyer beware.
LAist reached out to both Amazon and American Apparel, but have yet to hear back from either party.