How American Apparel is trying to make a comeback after two bankruptcies

How American Apparel came back from the brink of death
How American Apparel came back from the brink of death

At American Apparel's peak, the fashion retailer was synonymous with made-in-LA hipster cool and provocative advertising. It was known for manufacturing its products in Los Angeles and paying workers a proper wage in an industry known for poor working conditions.

It was also known for its founder, Dov Charney. Retail experts say in some ways, Charney was a visionary in retail.

"Dov Charney was way ahead of his time from the point of view of what he was doing right," said Jan Rogers Kniffen, CEO of J. Rogers Kniffen WWE. "He was manufacturing in the U.S. He was taking on all the social issues. He was all about perfecting immigration, LGBT rights, not using models who were made up or airbrushed or anything."

But he was also doing a lot of things wrong. Allegations of sexual harassment surfaced around Charney, and people started to wonder if American Apparel's overtly sexualized image went too far. In 2014, the board of American Apparel ousted Charney.

"The board asked me to voluntarily step down as CEO and relinquish control over my 27% ownership stake in the company, or be forcibly removed," Charney said in a January 2020 emailed statement to CNBC. "Using old, discredited allegations they knew were false as cover to terminate me, they embarked on a well-financed media campaign to discredit me and my track record as a successful executive and entrepreneur."

American Apparel went into bankruptcy court in 2015, and then again in 2016.

But the brand's wares, from knit T-shirts to zip-up hoodies and disco pants, are still available for purchase online. That's because the brand was purchased by Canadian company Gildan Activewear in 2017.

Charney went on to start a new company called Los Angeles Apparel, which manufactures its products in the LA area. Los Angeles Apparel shares some qualities with the company Charney founded — it buys fabric and yarn made in the U.S. and intends to become "the leading player in U.S. clothing manufacturing," according to its website.

How did American Apparel go from fast-growing retailer to bankruptcy court? Watch the video above to learn the factors that impacted its bottom line.

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