American Apparel Completes Purchase of Subcontractor

Los Angeles–based American Apparel completed the purchaseof U.S. Dyeing & Finishing Inc., a Garden Grove, Calif.–based dyeing and finishing facility that has done work for the apparel giant for approximately 10 years.

The sale, which was completed May 9, is valued at $3.8 million and includes machinery and equipment related to dyeing and finishing. American Apparel assumed U.S. Dyeing & Finishing’s lease as well as that of two neighboring buildings, adding a total of 135,000 square feet to its production capacity. The purchase was funded by cash on hand.

The move is part of American Apparel’s plan to reduce its dependency on contract-dye facilities, said Marty Bailey, the vertically integrated manufacturer’s chief manufacturing officer, in a statement. “While American Apparel already operates one of the largest cut-and-sew operations of its kind, this acquisition will further reduce our reliance on contract dye facilities, allowing us to expand our product offering, streamline our supply chain, lower costs and ensure better quality control,” he said.

Additional investments are planned at the U.S. Dyeing and Finishing facility—something the company believes will allow it to bring all of its dyeing volume in-house. American Apparel’s employee ranks also grew with the acquisition, adding approximately 140 manufacturing employees to its roster of more than 7,000 workers.

American Apparel also announced its first-quarter results for 2008. Net sales for the quarter totaled $111.6 million, up 52 percent from the same quarter in 2007. Profits, however, fell 34 percent to $1.1 million from $1.7 million during the same time in 2007. The company’s stocks fell 8.8 percent on the news, closing trading on May 14 at $7.70 per share. —Erin Barajas