Layoffs and Store Closures for American Apparel

The layoff of American Apparel workers began on Jan. 16 following the sale of the company’s intellectual property to Canadian T-shirt giant Gildan Activewear.

A U.S. Bankruptcy Court judge approved the $88 million sale to Gildan on Jan. 12. Wescoast Textile in Compton, Calif., will buy American Apparel’s knitting and dyeing facility in Garden Grove, Calif. The American Apparel factory in downtown Los Angeles’ produce market district will close as will its facility in South Gate, Calif.

Next up is the closure of American Apparel’s 100 retail stores across the country. The stores are expected to close by the end of April.

At the time of Gildan’s purchase American Apparel employed 3,500 workers, with about 300 employed at the knitting facility in Garden Grove.

American Apparel filed for Chapter 11 bankruptcy protection in November. This was the second bankruptcy filing for the company in a little more than one year. The company was founded in 1997 by Dov Charney, who took the company public in 2007 and was later ousted by the board of directors.

Gildan is a manufacturing powerhouse with operations in Honduras, Nicaragua, the Dominican Republic and Mexico. The vertically integrated Canadian company employs 48,000 people, more than half of whom—25,000—work in Honduras. The Canadian company also operates four yarn-spinning facilities in North Carolina and a fifth in Georgia. Gildan claims to be the largest consumer of U.S. cotton. American Apparel will join Gildan’s portfolio of brands, which includes Alstyle Apparel, Anvil, Gold Toe and Peds. Many of the company’s products are sold at Target, Wal-mart, JC Penney and Kohl’s.