Risks
The retail manufacturing industry involves various risks and uncertainties in addition to the normal risks of business. It should be noted that American Apparel may be adversely affected by a downturn in general economic conditions and other forces beyond control. In addition, other risks and uncertainties not presently known or that American Apparel currently believes to be immaterial may also adversely affect the business. Any such risks or uncertainties, or any of the following risks or uncertainties, that develop into actual events could result in a material and adverse effect on the business, financial condition, results of operations, or liquidity. |
Strengths
American Apparel has relied on various core business strengths that have contributed to our past success and will contribute to their future growth.
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Recommendations
Potential Employer?
American Apparel is a well known company for young adults entering into the workforce, due to their target market of young metropolitan adults. The company prides themselves on being sweatshop free, participating in political activism to benefit their employees, and corporate responsibility. American Apparel has also had their share of scandal that has rocked the public image of the company. After an evaluation of the benefits and risks of working for American Apparel, the consensus seems to be that the risks outweigh the benefits.
There are many appealing benefits to working at American Apparel. The company attracts forward thinking customers and followers through many different company initiatives. Political Activism including Legalize LA and Legalize Gay are a huge benefit for many employees. Legalize LA campaigns for immigration reform and has been for over 11 years. Immigration is an issue that weighs heavy on the hearts of American Apparel employees and family members. The Legalize Gay campaign let their GBLT employees know that the company would support whatever they wanted to do. American Apparel believes in freedom, expression and equality, things that are inherently condemned in the prohibition of gay marriage. Another benefit to working at American Apparel is the company's stance on corporate responsibility. Donations to charities, green initiatives, and organic products are key focuses for American Apparel. Increased importance on environmental initiatives make working for the company appealing to young adults looking to enter the job market. Another benefit to working at American Apparel is the diversity in workplace positions. With manufacturing and distribution operations taking place within a few square miles, there are over 5,000 employees within Los Angeles. The average sewer with experience at American Apparel is making about $25,000/yr, or $12 an hour. This can be higher in some cases. The company also offers parking, subsidized public transport, subsidized lunches, free onsite massages, a program of paid sick leave that began in 2015, and much more. Most importantly American Apparel guarantees job security and full-time employment; this is an anomaly in the garment industry, which has historically been dominated by seasonal work.
Scandal and Financial instability make working at American Apparel a risky decision. American Apparel may attract a forward-thinking customers and employees with its made-in-America image. But the company has certainly accrued its fair share of scandals along the way. American Apparel CEO Dov Charney has faced multiple accusations of unwanted sexual conduct, including accusations that he forced an employee to perform oral sex and kept one employee as a sex slave. American Apparel was sued in 2010 for allegedly terminating an employee who was undergoing cancer treatment, CBS Los Angeles reports. The company settled the lawsuit for $60,000 in 2011, according to Daily News. American Apparel hires workers only after taking a full-body photograph of them and has faced accusations that it only hires the best looking candidates. In 2011, garment worker Tuan Phan was killed by a circular knitting machine at one of American Apparel's factories. The company has been accused of racism, American Apparel paid out over $300,000 in damages after a worker sued for being called "n****r" by his superior repeatedly. American Apparel's racy ads have been banned repeatedly for showing nudity, supposedly being exploitative and sexualizing child models. Financial instability is also a key risk in working for American Apparel. American Apparel has been flirting with bankruptcy since 2010, coming especially close in the spring of 2011 after losing around $86 million. On April 2nd, 2015 the new CEO Paula Schneider announced 180 layoffs.
Articles with titles such as "American Apparel Is a Lesson in How Not to Run a Company" have showcased the company's historically dysfunctional corporate governance and prove the risk is not worth the employment opportunities available at American Apparel. At first glance, American Apparel can be a very inviting employer, especially for young trendy adults in metropolitan areas. A decent employee discount and working for a company that values political activism and corporate responsibility can be very appealing. However, with consistent scandal and poor financials, this company would be a poor choice for employment opportunities. There is room however for possible company improvement with the replacement of CEO Dov Charney, and if the improvement leads to a decrease in risk. If the company follows through with improvements, they could have the possibility to become a leading industry employer.
American Apparel is a well known company for young adults entering into the workforce, due to their target market of young metropolitan adults. The company prides themselves on being sweatshop free, participating in political activism to benefit their employees, and corporate responsibility. American Apparel has also had their share of scandal that has rocked the public image of the company. After an evaluation of the benefits and risks of working for American Apparel, the consensus seems to be that the risks outweigh the benefits.
There are many appealing benefits to working at American Apparel. The company attracts forward thinking customers and followers through many different company initiatives. Political Activism including Legalize LA and Legalize Gay are a huge benefit for many employees. Legalize LA campaigns for immigration reform and has been for over 11 years. Immigration is an issue that weighs heavy on the hearts of American Apparel employees and family members. The Legalize Gay campaign let their GBLT employees know that the company would support whatever they wanted to do. American Apparel believes in freedom, expression and equality, things that are inherently condemned in the prohibition of gay marriage. Another benefit to working at American Apparel is the company's stance on corporate responsibility. Donations to charities, green initiatives, and organic products are key focuses for American Apparel. Increased importance on environmental initiatives make working for the company appealing to young adults looking to enter the job market. Another benefit to working at American Apparel is the diversity in workplace positions. With manufacturing and distribution operations taking place within a few square miles, there are over 5,000 employees within Los Angeles. The average sewer with experience at American Apparel is making about $25,000/yr, or $12 an hour. This can be higher in some cases. The company also offers parking, subsidized public transport, subsidized lunches, free onsite massages, a program of paid sick leave that began in 2015, and much more. Most importantly American Apparel guarantees job security and full-time employment; this is an anomaly in the garment industry, which has historically been dominated by seasonal work.
Scandal and Financial instability make working at American Apparel a risky decision. American Apparel may attract a forward-thinking customers and employees with its made-in-America image. But the company has certainly accrued its fair share of scandals along the way. American Apparel CEO Dov Charney has faced multiple accusations of unwanted sexual conduct, including accusations that he forced an employee to perform oral sex and kept one employee as a sex slave. American Apparel was sued in 2010 for allegedly terminating an employee who was undergoing cancer treatment, CBS Los Angeles reports. The company settled the lawsuit for $60,000 in 2011, according to Daily News. American Apparel hires workers only after taking a full-body photograph of them and has faced accusations that it only hires the best looking candidates. In 2011, garment worker Tuan Phan was killed by a circular knitting machine at one of American Apparel's factories. The company has been accused of racism, American Apparel paid out over $300,000 in damages after a worker sued for being called "n****r" by his superior repeatedly. American Apparel's racy ads have been banned repeatedly for showing nudity, supposedly being exploitative and sexualizing child models. Financial instability is also a key risk in working for American Apparel. American Apparel has been flirting with bankruptcy since 2010, coming especially close in the spring of 2011 after losing around $86 million. On April 2nd, 2015 the new CEO Paula Schneider announced 180 layoffs.
Articles with titles such as "American Apparel Is a Lesson in How Not to Run a Company" have showcased the company's historically dysfunctional corporate governance and prove the risk is not worth the employment opportunities available at American Apparel. At first glance, American Apparel can be a very inviting employer, especially for young trendy adults in metropolitan areas. A decent employee discount and working for a company that values political activism and corporate responsibility can be very appealing. However, with consistent scandal and poor financials, this company would be a poor choice for employment opportunities. There is room however for possible company improvement with the replacement of CEO Dov Charney, and if the improvement leads to a decrease in risk. If the company follows through with improvements, they could have the possibility to become a leading industry employer.
Potential Investment?
Investing in American Apparel would unlikely produce positive results. Poor financial records and constant instability within the company are two major reasons why this company would be a terrible investment. Scandal and poor public image also make for a unhealthy investment environment. I would not recommend investing in American Apparel, however possible corporate improvement may lead to a growth in stock price.
In March 2015, American Apparel Inc. delayed the filing of its annual financial report as it reworks a lending agreement to allow it to take on more debt provided by a hedge fund. The retailer, which is in a battle with ousted founder Dov Charney, reported some estimated annual results in the filing. Sales fell about 3.9 percent to $609 million. That would imply revenue fell 9.2 percent to $153.6 million during the fourth quarter, the steepest quarterly drop in four years. The company has lost over $750 million dollars in shareholder value over the last seven years. However, there is a possibility of a company comeback, stock prices rose over 20% after the announcement of the firing of Dov Charney. Amid sagging share prices, high-profile lawsuits, salacious media coverage, and a restructuring that brought five new members to the table, the board handled the situation masterfully – beginning with its outright control of the transition narrative from start to finish.
The financial crisis for American Apparel in 2014, was a result of the sexual harassment scandal involving the CEO and founded Dov Charney. The founder and former chief executive of American Apparel, Dov Charney, plans to file a lawsuit claiming $40 million in damages for breaches of his employment contract, and more lawsuits are planned, his attorney said on Friday. Charney was fired in December, six months after he was suspended for allegedly misusing company funds and for allowing the posting on the Internet of nude photos of a former female employee who had accused him of sexual harassment.
The struggle of a rebound from the financial crisis and CEO scandal for American Apparel will be a long process, the company has a lot of work to get done if they want investors to be interested. The SEC has launched a formal investigation into issues raised during an evaluation by the board of American Apparel of controversial Founder Dov Charney. An attempted company revival is underway within the American Apparel organization, however there is no guarantee of success. The record low financials and constant struggle with scandal are two significant reasons that as an investor, you should hold off on investing in APP.
Investing in American Apparel would unlikely produce positive results. Poor financial records and constant instability within the company are two major reasons why this company would be a terrible investment. Scandal and poor public image also make for a unhealthy investment environment. I would not recommend investing in American Apparel, however possible corporate improvement may lead to a growth in stock price.
In March 2015, American Apparel Inc. delayed the filing of its annual financial report as it reworks a lending agreement to allow it to take on more debt provided by a hedge fund. The retailer, which is in a battle with ousted founder Dov Charney, reported some estimated annual results in the filing. Sales fell about 3.9 percent to $609 million. That would imply revenue fell 9.2 percent to $153.6 million during the fourth quarter, the steepest quarterly drop in four years. The company has lost over $750 million dollars in shareholder value over the last seven years. However, there is a possibility of a company comeback, stock prices rose over 20% after the announcement of the firing of Dov Charney. Amid sagging share prices, high-profile lawsuits, salacious media coverage, and a restructuring that brought five new members to the table, the board handled the situation masterfully – beginning with its outright control of the transition narrative from start to finish.
The financial crisis for American Apparel in 2014, was a result of the sexual harassment scandal involving the CEO and founded Dov Charney. The founder and former chief executive of American Apparel, Dov Charney, plans to file a lawsuit claiming $40 million in damages for breaches of his employment contract, and more lawsuits are planned, his attorney said on Friday. Charney was fired in December, six months after he was suspended for allegedly misusing company funds and for allowing the posting on the Internet of nude photos of a former female employee who had accused him of sexual harassment.
The struggle of a rebound from the financial crisis and CEO scandal for American Apparel will be a long process, the company has a lot of work to get done if they want investors to be interested. The SEC has launched a formal investigation into issues raised during an evaluation by the board of American Apparel of controversial Founder Dov Charney. An attempted company revival is underway within the American Apparel organization, however there is no guarantee of success. The record low financials and constant struggle with scandal are two significant reasons that as an investor, you should hold off on investing in APP.