American
Apparel is a peculiar player of the fashion market, whose action oppose to most
of industry representatives. Common industry practice is to focus on design and
branding issues – to concentrate on the core business, but American Apparel
acts differently, they are fully-integrated: from dye house and knitting factories
to international fashion retail chain. At the same time company cares a lot about
marketing (that may be rather provoking, though cheap and efficient) and
logistics processes. By combining these specific factors company has created
its image and has taken a strong market position – due to their specific
business model that involves harsh control on all levels.
Inbound logistics
Vertical
integration of American Apparel core business has resulted into simplification
of inbound processes – company simply does not need much from the external
environment. Such way of doing things seems a good solution for the company, as
it may always be sure that there could be no problems with suppliers, and the
business will operate almost in any condition of external environment.
Operations
All
of company’s operations except from international fashion retail, takes place
in USA and that is core part of company’s strategy – they could have production
in China with much lower wages, however being a throughout USA brand is what
American Apparel has always been doing. The tag “Made in USA” is really rare, especially
in the fashion industry, so this issue is the core value-adding factor. Company
focuses greatly on the control of its operations and the quality – that is the
consequence of vertical integration, company seeks highest quality at every
stage of production.
Outbound logistics
Company,
represented by its major shareholder and CEO claims that vertically integrated
business model allows to design, cut, distribute and sell an item globally in
just 7 days. Moreover, company does not franchise its foreign fashion retail
operations, and pursues a peculiar strategy with its stores. It focuses on the
principle of spending relatively low amounts on store design and refurbishment.
For example, in USA American Apparel tends to choose locations for their stores,
with rent is about $200 per square foot – company uses low amount of
investments in their distribution premises. At the same time, company operates
and works a lot on an e-shop that is also a very important distribution channel
nowadays, and share of e-sales in company’s financial statement will definitely
be growing in the future.
Marketing & sales
American
Apparel has created a powerful brand that has high recognition and trust
indicators. Company also states, that their brand has a cult status worldwide,
due to their “downtown of LA production”. Share of international revenues has
increased greatly due to expansion that American Apparel has set up. In their
marketing they often use provocative methods that could be considered pretty
much helpful for brand development. At the same time, they have a focus on
quality – so the final picture for the client is really very likely:
good-looking, fashionable clothing of highest quality (that is approved by
“Made in USA” tag). Also, an important issue for company’s marketing activities
is their environmental friendliness that is a very important point in the
decision-making process in their home market, so it was really worth making
such a point. With their approach American Apparel for the client seems to be a
company producing premium-branded clothing with highest quality and no
“unnecessary” value creation points (like stores design). For American Apparel,
marketing function is a cornerstone, that ties together all the peculiarities
of the brand and makes it clear for the customers – why you should buy American
Apparel goods.
Service
Service
for American Apparel mainly stands for the contact with the client – evidently
in the selling points, American Apparel stores. Based on advanced HRM
practices, company has built the atmosphere of support and has set up fair
remuneration, so employees should provide much higher service level – and this
creates additional value to what customers buy.
Company infrastructure
Being
a massive vertically integrated company, American Apparel has a focus on
location of production facilities of their goods – being a strong USA brand,
each item being tagged with that, and there are branding implications from that
point. One specific thing that depicts company’s approach to infrastructure was
installation of a solar battery on the roof of their factory. Acting this way
company attracts attention to its premises and location of the premises – you
always have to fit with local trends in order to succeed.
Human resource management
American
Apparel cares a lot about their employees and offers them a range of extremely
convenient options included in employees’ basic salary. This kind of approach
shows that company wants to establish a relationship with each and every
worker, and the result would be workers extended commitment and higher quality
of work done. Basically, people is the foundation for company’s successful
development in recent years, so it is evidently also a way of creating
additional value (from company’s insight it is much more important, than from customers
point of view).
Technology
Technology
for American Apparel is probably not the most important shape of the business
model, due to business specifics. However, technology is extremely important in
production – the system should be working perfectly and the quality of the
product should always be on top level. Quality of goods is definitely plays one
of major roles in company’s strategy.
Procurement
Due
to the fact that company has internalized its operations greatly throughout vertical
integration process, procurement as a supportive issue that has significant impact
on the process of running business. On the other side, procurement does not
have significant effect on value creation – this supportive function does not
imply that.
American Apparel does business in an
exceptionally competitive landscape. AA has many competitors; however, a few of
their main competitors are H&M,
Arcada, Inditex, Benetton and Gap. These companies not only offer similar
products to American Apparel, but also target a very similar demographic. Their
products are intended to appeal to young, “metropolitan” adults between the
ages of 20-30. These consumers are mostly nearing the end of their education
and moving on to careers in the workforce. They mostly do not have access to a
large disposable income, therefore clothing cannot be so expensive that it will
be unable to be purchased regularly. However, because of their age, they still
want high quality products. Because of these seemingly contradictory
considerations, companies like American Apparel and its competitors have an
increasingly difficult time straddling the line between those two. The
companies that can pull this balancing act off will be successful, and the ones
who cannot will be left in the dust.
H&M. Hennes & Mauritz AB, also known as H&M, is an apparel and
accessory store founded in 1947 in Sweden known for offering the
latest fashion trends. H&M
specializes in taking advantage of the season’s latest looks inspired by
design houses around the world and providing women, men, and children
contemporary clothing styles at low prices. Targeting the 18- to 34-year-old
market, the company manufactures affordable, stylish clothing. H&M operates
nearly 2,000 stores in 38 countries and has a sizeable geographic market
presence and overall brand recognition. In March 2009 H&M opened its first
store in Russia, Moscow and now operates 15
stores in 5 cities.
Benetton. Benetton, incorporated in 1965 in Italy, empathized brightly colored knitwear. It achieved
prominence in the 1980s and 1990s for its controversial advertising an as a network
organization that outsourced activities that
were labor-intensive or scale insensitive to subcontractors. But Benetton
actually invested relatively heavily in controlling other production
activities. Where it was investment-light was down stream: it sold its
production through licensees, often entrepreneurs with no more than $100,000 to
invest in a small outlet that could sell only Benetton products. While Benetton
was fast at certain activities such as dyeing, it looked for its retailing
business to provide significant forward order books for its manufacturing business
and was therefore geared to operate on lead times of several months. The
company was successful in Britain, however, having a long standing in the
market, they witnessed failure to keep up pace with the accelerated high fashion pressure by
the other European competitors, which are now the known as Gap, H&M and
Zara. Te rise of these competitors on high street has been witness successful
because of a higher demand for fast fashion. Styles showed in magazines and
other advertorials are what people wish to wear. Top designers have created
collection extensions, which cater people who can afford to spend their hard
earned cash on triple figure. This resulted success to the affordable
collection of European fashion brands. In 1987 Benetton opened its first store
in Russia, Moscow which were
operated though partnership with Russian company “Green Rock”. Now Benetton operates
70 stores in more than 30 cities.
Arcadia, which is the leading British apparel retailer, operates about half a
dozen apparel chains numbering more than 2,500 stores in the UK, mostly in urban areas. Its
fashion chains include Dorothy Perkins, Miss Selfridge, Wallis, Topshop, and
Evans (women’s clothing), as well as Burton
and Topman (men’s clothing). The company has some 420 franchised stores in more
than 30 countries and opened a flagship Topshop store in New York in Spring 2010. Therefore, Topshop
is considered one of AA’s main competitors. First Topshop&Topman store in Moscow was opened in
November 2006. Since that time the retailer opened 18 Topshops in 6 Russian
metropolitans.
Inditex. AA’s third competitor is Industria
de Diseño Textil (Inditex), a Spanish company specializing in disposable chic
fashions that are here today and gone tomorrow. Inditex sells on a global
scale, with some 4,430 shops in 70-plus countries, under eight different
banners: Zara, Oysho, Massimo Dutti, Pull and Bear, Bershka, Stradivarius, Zara
Home, and Uterqüe. Located mostly in Europe, the firm’s stores answer to
popular trends by telling designers in Spain what customers are asking for
locally. Zara is AA’s most relevant competitor. The corporation entered Russia as early as 2003, when first Zara was
opened in Moscow.
In the beginning of 2012 the amount of all Inditex’s stores is more than 250 in
14 big Russian cities.
Gap. AA’s fourth competitor is Gap, Inc.
Gap is known for providing jeans, khakis, and T-shirts. The firm, which
operates about 3,150 stores worldwide, built its iconic casual brand on basics
for men, women, and children, but over the years has expanded through the urban
chic chain Banana Republic and ailing budgeter Old Navy. Other brand extensions
include GapBody, GapKids, and babyGap; each also has its own online incarnation.
All Gap clothing is private-label merchandise made exclusively for the company.
From the design board to store displays, Gap controls all aspects of its
trademark casual look. In Russia First Gap store was opened in December 2008.
Nowadays, the company operates 9 shops in Saint-Petersburg and Moscow.
Positioning map
Also we have to consider a market positioning map from another perspective: product quality and price as long as one of the AA's main advantages is exceptional quality.
·The
existence of barriers to entry. Almost no barriers except some moderate capital
requirements.
·Switching
costs or sunk costs. No serious switching costs exist among customers. Brand
loyalty is relatively low.
·Capital
requirements. There is no need for huge capital requirement to start producing
your clothes line, but there is one to build your own distribution and to
advertize your brand. These two activities require some money.
·Access
to distribution. It is hard to build a strong brand using clothes retailers, so
one should built its own distribution network including own shops or use
e-commerce.
·Industry
profitability. Industry is quite profitable, so that entrants appear quite
often.
2)Substitution.
No substitutions for clothes. Clothes are used for centuries! That makes
rivalry more intensive. However, there is substitute to retail chain, it is
e-commerce. In order no to lose power many companies have their own sites.
Apparel is not an exception.
3)Power
of customers. Moderate. Customers can’t put firm under serious pressure. There
is a huge amount of customers and each buys a small amount, so the only threat
is price sensitivity. And it makes sense. Due to absence of high brand loyalty
customers are quite price-sensitive, so it gives them power.
4)Power
of suppliers. Low to moderate. There is a lot of suppliers of raw materials in
this industry, but nonetheless it takes some time and money to switch to
another supplier. Uniqueness of the materials is low, so all suppliers are
quite the same.
5)Direct
competition. High. It is the main factor in the industry. In the modern market
it is really hard to attract new customers. Advertizing costs a lot and
furthermore, it is hard to create really attractive advertizing, to create
something really new. There are a lot of brands existing in the market. They
try to differentiate themselves in order to find their niche and decrease
competition, but nonetheless in every niche there are 3-5 direct competitors of
different size, but in some locations there are only 1-2 firms and so these
locations are quite attractive to the new entrants.
Competition primarily based on the customer
image that firm created and quality, price is the second thing (I mean +-15% of
the price, of course difference in several times makes sense). E-commerce also forces
competition because it seriously increases availability of the product in any
location.
Corruption in the process of trademark
registration
Russia enters WTO.
Economic
Consumption crisis in 2009
Rising prices
especially for cotton clothes:
(Global aspects: The global cotton price has been
rising for several years: in 2009 it grew by 30%, in 2010 by 60%. A
particularly sharp rise in cotton price started in mid-2010. Therefore clothes
made of natural materials will be transferred to the higher price segment)
Increase in the retail sales price of clothing and
other finished products
Market recovery in 2010
During 2010, total industry sales increased by 14% in
current value terms.
The Russian apparel market is very
attractive to foreign companies; it is not particularly consolidated and is
recovering rapidly from the financial crisis.
the strengthening of the local currency (ruble) and
increasing quantity of retail volume sales in 2010 clearly indicated
the apparel the increase in purchasing ability in Russia.
But the clothing market is already close to
saturation, and double-digit annual growth is not expected over 2010-2015.
Opportunities in the Russian apparel market
are open not only for fast-fashion, but also for foreign brands operating in the
premium and luxury segments.
Good opportunity to penetrate the market for
outlets offering quality and fashionable clothes at reasonable prices
Social
In 2009 companies working in the clothing industry
attested to the decline in consumer activity (Russian consumers stop buying the
same volume of clothes)
In 2010, with evidence of stabilization of the local
currency, people started to spend money again and permit themselves a more
comfortable standard of living.
Decline in unemployment and rising real disposable
income supporting increased consumer confidence and spending.
Demand for mid-market clothing saw a gradual
rehabilitation of the Russian apparel industry
By the end of 2010, the Russian apparel
market had grown by 14% in current value terms. Predicting consumer demand,
retailers had been actively purchasing collections
The growing popularity of healthy lifestyles. This
stimulates sales of sportswear, footwear and sports accessories.
The lack of consumer response to significant discounts
in retail stores.
Increasing quality retail infrastructure in the
region.
Technological
The reduction of industrial stocks of raw materials
Russia does not produce cotton, and
therefore depends entirely on world prices for this raw material.
Increasing interest in Franchising and e-commerce between Russian entrepreneurs.
Companies working with Russian intermediaries in most
of cases decide to enter the market directly.
Legal
Complex set of measures for the registration of a foreign trademark.
Environmental
Low public concerns of ecology as a whole. But the population of big cities are getting more interested in these problems. At the same time American Apparel positions itself as a "green" company, so this fact can provide the additional advantage for the company.
Factor conditions. In this industry main factor conditions for the firm are: human
resources (marketing team, creative team, designer), infrastructure
(network of shops) and capital resources required to afford advertizing
campaigns.
Demand conditions. Under the influence of the supporting industries customers become
more sophisticated and willing to have new trends in the industry, they
need this changes and this changes drive creativity and innovation.
Related and supporting industries. Media industry is the most important
supporting and related industry, especially fashion media industry. It has
the power to drive the fashion market influencing customers’ behavior and
attitudes, so company has to innovate, to create new collections and so
on.
Firm strategy, structure and rivalry. Rivalry is fierce. It also forces
companies to innovate, to create their own style and thus differentiate
themselves from other players in the market.
Government. The only way how government may influence firm’s activity is the
regulation in public sphere. For example, some advertizing banners of the
Apparel were banned because of its sexual context.
Chance events. The main uncertainty is people’s preferences. Despite the fact
that fashion magazines try to influence it, sometimes people behave
themselves in different ways and prefer another product.
The Russian apparel retail industry had total revenue of $48,835.6 million in 2011, representing a compound annual growth rate (CAGR) of 6.2% between 2007 and 2011.
The performance of the industry is forecast to accelerate, with an anticipated CAGR of 6.3% for the five-year period 2011 - 2016, which is expected to drive the industry to a value of $66,408.5 million by the end of 2016.
Market Value
The Russian apparel retail industry grew by 5.8% in 2011 to reach a value of $48,835.6 million.
Market Segmentation
Womenswear is the largest segment of the apparel retail industry in Russia, accounting for 54.6% of the industry's total value.
Gegraphy Segmentation
Russia accounts for 11.8% of the European apparel retail industry value.
Market Value Forecast
In 2016, the Russian apparel retail industry is forecast to have a value of $66,408.5 million, an increase of 36% since 2011.
Today’s globalization makes moving internationally sooner a much more attractive opportunity.
A recent report from PricewaterhouseCoopers states that:
barriers to global trade will continue to come down;
developing markets will continue to phase out restrictions on foreign retailer operations and liberalize regulations of direct foreign investment;
global expansion a key source of revenue and a necessity, not an option, for retailers;
growth of middle class consumers around the globe is a key driver of these international opportunities.
Company should not longer concentrate on the domestic marker, because of high speed of saturation and limits on growth perspectives! This actually refers to American Apparels, which is still is more concentrating on its home maket.
It's also important to look at the following information and make conclusions:
The general factors that drive retailers today to expand abroad are the following:
While the obstacles can be the following:
Liability of foreignness – this liability arose from the cross-cultural, social, political differences between host and home country, and lack of knowledge how to do business in this or that particular country. ·
Liability of expansion - causes difficulties associated with the increase in scale of company’s operations and includes transportation, coordination and communication obstacles.
Liability of newness - causes difficulties associated with lack of knowledge how to do business in the new country and with lack of experiences in host country’s nature of transactions. For example it can be problem of dealing with local authorities, especially in the emerging countries.
The penetration of American Apparel of the world
market was one of the fastest in the history of the American economy.
American Apparel employs more than 10,000 employees
worldwide, whose salaries are among the highest wages of factory workers in Europe.
The international segment consists of the retail,
wholesale and online consumer operations outside
of the US, and Canada.
The retail operations of segment comprises 76 retail
stores in 18 countries, including
Europe
UK
Ireland
Austria
Belgium
France
Germany
Italy
Netherlands
Spain
Sweden,
Switzerland
Israel
Asia
China
South
Korea
Japan
As well as Australia,
Mexico and Brazil.
American Apparel is also a great example of a brand
that has moved aggressively overseas while still exploiting growth
opportunities of the domestic market.
Rapid expansion began in2004when company first entered Canada and Europe.
In 2005 American Apparel entered Asia and in 2006
expanded into six new countries last year, including China, Brazil,
and Austria.
American
Apparel owns and operates each of its retail locations as opposed
to franchising. According to the management, the vertically integrated model
allows the company to design, cut, distribute and sell an item globally within
couple of weeks.
The
main reason of the company to open stores overseas directly without franchising
partnerships is to gain the full control over operasions and to
monitor the fickle fashion market and respond quickly to new trends.
American Apparel operates its retail and wholesale
business through the following direct and indirect foreign subsidiaries:
American Apparel Canada Wholesale Inc., American Apparel Canada Retail Inc.,
Fresh Air Freight, Inc., American Apparel Deutschland GmbH, American Apparel
Spain, S.L., American Apparel Italia SRL, American Apparel (UK) Ltd., American
Apparel (Carnaby) Limited, American Apparel Mexico SdeRLde CV, American Apparel
Mexico Labor, SdeRLde CV, American Apparel Japan Yugen Kaisha, American Apparel
Korea Co., Ltd., American Apparel Australia Pty, Ltd., and American Apparel
Retail (Israel), Ltd.
Expanding business internationally is an
important part of American Apparel's overall growth strategy.
As company expands internationally, it tries to
effectively and efficiently open and operate stores in international
locations.
As it is oficially stated, International growth is
limited unless company can:
identify
and obtain suitable markets and sites for store locations;
negotiate acceptable lease terms;
complete
store design and remodeling projects on time and on budget;
hire,
train and retain competent store personnel;
gain
acceptance from foreign customers;
manage
inventory effectively to meet the needs of new and existing stores on a
timely basis;
manage
and expand infrastructure to accommodate growth;
generate
sufficient operating cash flows or secure adequate capital on commercially
reasonable terms to fund our expansion plan;
manage
foreign exchange risks effectively;
address
existing and changing legal, regulatory and political environments in
target foreign markets;
manage
international growth, if any, in a manner that does not unduly strain
financial, operating and management resources of the company.
Furthermore,
American Apparels carefully choosses markets to entry and take into account
consideration legal, regulatory, political and economic risks of the host
market.
American
Apparel also runs actively e-commerce for the United States, Canada, the United Kingdom, Continental Europe, Switzerland, Japan, Korea, and Australia.
·American
Apparel designs, creates and prints its own advertisements.
·Advertising
campaigns are mainly its provocative, controversial and sexual, inspired by
American Apparel’s founder and current CEO Dov Charney. For example company
used porno stars and half – naked its own labor in its ads, and so far its ads
were banned in a number of countries.
·T-shirts prints
are considered as part of advertising brand;
·Company
actively uses online advertising;
·American
Apparel images often display imperfections and asymmetrical features, even
using models without make up and Photoshop processing;
·Majority of the
models are amateur, chosen from the streets and are usually recruited by Dov
Charney himself, and they are usually rather skinny and so – called
"cocaine-chics".
Dov Charney also actively relies on the main
policies of the company in promoting its brand, i.e. treatment of the
employees, company’s attitude toward immigration laws accompanies company’s
advertising campaigns. American Apparel also launched the Legalize Gay
campaign. Moreover company also actively promotes itself as company that
doesn’t outsource to other countries to cut costs.
•American Apparel is a vertically-integrated company;
•Integration extends to 260 and more retail storefronts and includes all issues of production, avoid outsourcing and allows American Apparel to reach fast turn-around time from design to finished product;
•In general it takes couple of weeks to develop the idea and send it to the retail.
Corporate Social Responsibility issues are considered as keydrivers of brand recognition and growth of American Apparel. Corporate culture and employment
•Nowadays the number of employees worldwide is nearly 10 000 people and American Apparel doesn’t use labor outsourcing;
•Company pays one of the highest salaries to its factory workers. In comparison other American companies operating in China are paying in average 40 cents, while American Apparel is paying 12 dollars per hour. Moreover there are such benefits as health care, lunches, bus passes, free English additional language classes, massage therapists, free bicycles, free parking, proper lighting and ventilation, long distance phone calls;
•Employees in foreign countries doesn’t get the same as in USA salaries, but in developing countries such as China employees are guaranteed to get minimum USA wage;
•After going public, the company offered employees as much as $40 million in stock shares. The plan grants employees roughly 1 share of stock for every workday they had spent at the company;
•Active usage of "team manufacturing" gives some kind of freedom to the strongest employees of the company, as they control themselves their daily production schedule and hourly wages. Such type of labor organization allowed American Apparel to triple its garment production (to produce 1 million shirts per week and manufacture 275,000 pieces a day), without significant staff increase.
•The creative personnel of American Apparel is hired according their sense of culture and fashion, not their CVs. Moreover the company was even criticized by focusing on appearance and style in recruiting its retail staff.
•But according to Dov Charney unconventional corporate culture is the main driver of company's creativity and growth. Immigration issues
•In 2001, American Apparel acted like vocal advocate for reform of U.S. immigration laws;
•Company actively supports its immigrated personnel to participate in different protests and meetings dedicated to pro - immigration issues;
•Immigration support also follows company’s ads. Environmental policies
•American Apparel depends on environmentally friendly practices and uses innovations in sustainability due to vertical integration;
• American Apparel manufacturing system is designed around the concept of "Creative Reuse"—which converts excess fabric from one garment template into several additional garments. This leads to the waste reducing and helps company to save about 30,000 pounds of cotton per week;
•It uses bicycle lending program for its employees and is a vegan-friendly clothing company (organic clothes);
•American Apparel uses solar electric systems on the factory roof and recycles its fabric scraps
The official mission statement of American Apparel is as follows:
“American Apparel is the most passionate and innovative wholesale blank T-shirt manufacturer and distributor in the world. We are committed to leveraging art, design, and technology to produce garments of the highest quality, while pioneering industry standards of social responsibility in the workplace.”
CEO and Spokesman Dov Charney, has stated the core beliefs of the company as such:
“Our goal is to seek profits through innovation not exploitation. We are advancing a hyper capitalist-socialist business fusion. By relentlessly pursuing efficiencies in management and production, we aim to demonstrate that the use of exploitative labor tactics is not only unnecessary but actually counterproductive. We recognize that over-reliance on low-wage and ill-treated labor… continues to cripple third-world countries and consumer values.”
The goals of American Apparel's are:
To be the biggest apparel manufacturer in the world, to do it by treating their workers fairly;
Appeal to the target market though helping the environment;
To find viable alternatives such as solar power, pesticide free organic cotton, and an internal environmental audit of daily operations;
To bring constantly social changes and revolutionary display of progressive politics and industry.
1969, January 31 – The birth of Dov Charney in Canada, the founder of
American Apparel.
Having entered in St. George's School in Montreal,
which is between America and Canada, Dov fell in love with American culture.
Being a teenager he already had a clear idea of how to run a business.
1984 – 15 years old Dov started transporting clothes of
American companies “Hanes” and “Fruit of the Loom” to Canada. As these
companies were manufacturing basic knitted clothes and Canadian market lacked
such staff.
1987
- Charney entered Tufts University, America's oldest university of
international relations and diplomacy, but three years later left University. It was during Charney's freshman year at Tufts University that the company took on the name "American Apparel" and began to experiment with screenprinting, importation and other parts of the apparel business.
1989
- Dov took a loan from his father ($ 10,000) to develop its own clothes and
created American Apparel, although just in a few years, the company had been on
the edge of bankruptcy, but survived.
1997
– American Apparel settled in Los Angeles. There Charney signed a contract with
entrepreneur Sam Lim and soon moved to LA his factory, where personnel of
American Apparel started to work permanently. During that time the brand
operated primarily as a wholesale supplier, selling its products to other
brands for making prints and other processing.
2000 - American Apparel moved into its current factory in downtown Los Angeles where it continued to grow primarily as a wholesale business, selling blank T-shirts to screenprinters, uniform companies and fashion brands.
2003
– Opening of the first American Apparel store in the heart of Los Angeles.
2005 - Dov Charney began to embody his idea of outright
advertising, and is slogan bacame: «You
don't need to be nude to feel dirty». Such advertising was positively
perceived by the target audience of American Apparel - young boys and girls. On
the T-shirts of the company appeared images of porno actresses such as Sasha
Grey, Lauren Phoenix, Charlotte Stokely and Faye Reagan.
Moreover in 2005, the company, having already achieved
great success in the wholesale trade, began to take the first steps in retail business. The company was ranked 308th in Inc.'s 2005 list of the 500 fastest growing companies in the United States, with a 440% three-year growth and revenues in 2005 of over US$211 million. 2006 - American Apparel announced reverse merger, in which Endeavor Acquisition Corp., a special-purpose acquisition company founded in July 2005, bought the company for $360 million. The merger closed in December 2007, at which point American Apparel became a publicly traded company. As a result, Charney became the President and Chief Executive Officer of the publicly traded company known as American Apparel, Inc. He also remained the majority shareholder.
2007 - In New York and Los Angeles two billboard featuring
Woody Allen appeared, only for a week. Dov took the shot from the 1977 year movie
"Annie Hall", with Woody in the image of the Rebbe, and signed in
Yiddish: "The Holy Rebbe", thus hinting at a romance of Woody with Soon-Yi
Previs, who was younger than Woody by 34 years. Woody Allen did not give permission
to use his own image in advertising. That’s why Allen sued American Apparel,
and only in May 2009, received compensation of five million dollars (half of
what his lawyers claimed).
In 2007, American Apparel has also become one of the
most commercially successful U.S. factories. Just outside the country their
income for that year accounted more than $ 125 million.
2008 – Provocative advertising campaign of American
Apparel was continued by promotional photo shoots with half-naked workers of American
Apparel. This campaign was banned in several European countries.
Also in 2008 it was rapid sales growth, reporting $545 million in total sales and exported sales of more than $200 million. 2010 - American Apparel's auditors, Deloitte & Touche, reconciled after informing the company that its financial statements for 2009 may not be reliable. The resignation led to investigation by U.S. Securities and Exchange Commission and the United States attorney’s office for the Southern District of New York. Then in August, the company was threatened with being delisted from the New York Stock Exchange for failing to submit a quarterly earnings report. It faced lawsuit from some of its investors. Revenues declined, and total debts rose to $120 million, and the company was in danger of defaulting on a $80-million loan from British-based Lion Capital LLP. Commenting on the loss of 1,500 workers due to concerns over illegal immigration Charney said "It broke our efficiencies and generated a situation where we were late delivering garments. It lost us an enormous amount of money. It cost us agility."
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