To better capitalize on consumers' frugality, Schneider said the company has implemented a "good, better, best" strategy. One example is using cheaper fabrics on designs that are likely to resonate with teenagers, and incorporating higher-quality materials on products meant for millennial mothers.
Still, the CEO contends that if the retailer designs better merchandise, shoppers will be willing to pay up.
"'Made in the U.S.' is more expensive, but our quality is better," she said. "It's not fast fashion because it lasts."
Other changes Schneider is making include rationalizing the number of units American Apparel produces — for example, reducing the number of men's T-shirt styles from 17 to four — and clearing up space on its crowded selling floor. In the stores that have piloted these changes, conversion — the ability to change shoppers into buyers — has gone up despite softer traffic.
The retailer has also closed 29 stores over the past year, for a total of 202 worldwide, and is experimenting with selling its brand via wholesale partners. It kicked off this initiative at Bloomingdale's Hawaii location in August, and the brand is now being rolled out to eight of the department store's doors. American Apparel currently generates about one-third of its revenue through a separate wholesale business, through which it produces unbranded apparel for other labels.
In spite of her plans, Schneider is transparent about the fact that 2016 will be a rebuilding year for the company, which filed for Chapter 11 bankruptcy protection in October.
On Monday, the retailer reported a net loss of $25.6 million during the quarter ended Sept. 30 — wider than its loss of $19.2 million during the same quarter last year. Meanwhile, sales came in at $126.1 million, down from $155.9 million a year ago.
"This is our year for stabilization," Schenider said.