Struggling American Apparel is looking for a buyer, and brand licensors Authentic Brands Group LLC and Iconix Brand Group Inc. are among some of the companies interested, multiple sources have told Reuters.
Negotiations with a buyer may lead the retailer to file for bankruptcy again to shed tens of millions of dollars in obligations, including leases for more than 200 stores, Reuters reports.
While the company says it will keep its manufacturing in the U.S., it could leave the city, an expensive manufacturing base, Reuters reports.
American Apparel emerged this past February from Chapter 11 bankruptcy protection as a private company. But the retailer has continued to bleed cash without jump-starting traffic or sales. American Apparel has struggled for many years before that, too, and was hobbled by ongoing battles with its founder and former CEO Dov Charney.
But its robust brand has piqued the interest from the likes of brand licensors Authentic Brands Group LLC and Iconix Brand Group Inc. Earlier this summer, multiple news outlets reported that the retailer was actively searching for a buyer, Los Angeles investment bank Houlihan Lokey had been hired to explore a sale and investor Ron Burkle’s Yucaipa Cos. has probed the embattled retailer's finances.
That doesn’t surprise Charney, who built the retailer with a commitment to making its products in the U.S., specifically Los Angeles, and despite much attention-getting sexualized marketing, an overall gritty L.A. sensibility.
Charney himself attempted to buy back his company during the bankruptcy proceedings in December, putting together a $300 million bid with help from investors that topped the value range that American Apparel’s investment bank estimated in court documents. But it also came with the stipulation that Charney would return, and the retailer turned the offer down.
Charney told Retail Dive earlier this year that he is now moving forward with a new L.A.-based clothing venture, and though he and his investors last year left the door open to acquiring the company, he seems uninterested at this point. "I'm saddened to hear the news," Charney told Reuters on Wednesday of the possibility of a sale. "I think it could be devastating for the Los Angeles community.”
Authentic Brands Group seems to be on a mission to bring failing teen retailers back to life. It was part of a consortium — with landlords Simon Property Group and General Growth Properties and liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC — that in August came to the rescue of bankrupt teen apparel retailer Aeropostale with a $243.3 million joint bid to keep open many more stores than the company had anticipated.