READ| 16 June 2018

Text: Martin Hufnagel
Title Photo: Alexandre FaulknerMonthly Payment

American Apparel went bankrupt after years of hype, scandals and v-neck t-shirts. Thank you for your business. How did that happen so quickly?

The first job interview I ever had was for a part-time job at American Apparel. A few months before I had started to invest my money in a new wardrobe: my first purchases were v-neck t-shirts or hoodies in different colours with a contrasting seam on the zipper (the one in pink being my favourite). With the end of my civil service, my monthly income ended as well. Unfortunately, the need for new clothes did not.

While window-shopping one day I spotted an advert for a job interview at American Apparel, and the idea was born to fill my empty pockets with a job at my favourite company at the time. One week later, I found myself, together with 20 other people, at the Jungfernstieg Store. The tension was tangible, and it even increased due to the fact that we all had to wait on the ground floor until we were called upstairs, one after another.

The deadly combination of my nervousness and my lack experience with job interviews lead to a dodgy conversation, with vague questions and uninspired answers. Before I was redeemed, the store manager shot a couple of photos of me as a part of the casting. I already knew that I wasn’t going to be a part of the American Apparel universe in the near future (even though I never saw the pictures, I’m sure that I have a tormented expression in every one of them).

And I was right: 'You’ll hear from us' was actually the last thing I ever heard. Perhaps, I was offended and stopped visiting American Apparel. Or maybe it was that new job that I got shortly afterwards that led me into a new direction. In any case, I stopped buying hoodies that had the colour of a tennis ball and started to invest in a new, more minimalistic wardrobe. 

American Apparel Factory, LA
Credit: RareBabe

By now a lot of time had passed. When I was walking down Sunset Boulevard in LA the other day, a storefront caught my eye. There were posters inside that announced a ridiculously cheap sale. It was an American Apparel affiliate, and inside there wasn’t the familiar white and luminous interior that I remembered, but a lot of cardboard boxes put on top of each other, clothes still wrapped in plastic and a few indifferent customers.

When I heard a year ago that Dov Charney, founder and face of the brand, was fired I assumed that the company wasn’t doing well, but I didn’t know that the stores had to close. Later that day I sat in a café, and because the news of the events depressed me, I began to search for the reason why American Apparel was over. As a result, I stumbled upon various revealing articles.

Dov Charney founded the company back in 1989 during his first year at TUFTS University. At first, he printed the school logo on T-shirts and sold them, and a year later he was producing his own logos. From the beginning, Charney claimed that quality and the manufacturing process were the pillars of his work. After the start in Boston, he spent several years in South Carolina, Montreal and New York. In the 2nd half of the 90s, he arrived in Los Angeles, and was able to establish some contacts there that were crucial for his production. From that point on, all of the company’s clothing was manufactured in the US. This helped to establish the company name and rounded the image. The foundation was set and the company was ready for the next step. A short time later the opening of the very first store was the beginning of a temporary victory march for American Apparel. 

American Apparel, Los Feliz | Los Angeles. April 2017
Credit: Martin Hufnagel

Not only did they have a good instinct for retro-based designs and the right clothes at the right time, they also raised their voice for minorities with their Legalize Gay and Legalize LA campaigns, and they publicized their fair production process too. Their campaigns were known for their allusions to unrestrained sex, and the media-effective scandals evoked the cool yet untouchable image of the brand.

The perfect marketing strategy was born and the hype was on. People lined up for store openings and job interviews because they wanted to be a part of the American Apparel universe. You may think I’m just talking about clothes, but for me it was more than that: To me, it was a t-shirt with the perfect print, skinny and shiny leggings, not knowing if this piece is meant for a girl or a boy (doesn’t matter) and – of course – the underwear. During that time, a lot of the men who I was lucky enough to see in their undies wore them with the contrasting white elastic band (or the BUTT t-shirt from the infamous collaboration with the magazine).

Credit: Courtesy of American Apparel

The packaging had the names of a lot of different cities printed all over, symbolising an urban experience that I found worth striving for. The deep v-necks provided me with an insight to an exciting and queer world. NeedIess to say, I did not just come to buy a piece in a colour that I had been afraid to wear a few days ago, but also because of the employees (called 'models'). It seemed to me that they were so different and bursting with self-confidence (and sex).

Credit: Courtesy of American Apparel

However, despite being so intensely interesting from the start, it somehow ended for me. Firefox stopped citing as one of my most-visited sites. There was no longer a big billboard at the Sternschanze in Hamburg showing the latest scandalous image from the current campaign. Thinking about it, apart from the disastrous job interview there wasn’t an explicit reason. It was a process. I remember that I was disappointed with a purchase from a sale (a knitwear jacket that lost its buttons while I was unpacking it) and shortly after I got my new job and began to explore a new direction.

This was my personal story, but the one from American Apparel wasn’t over yet. During the time of their aggressive expansion, the presence of the company increased – as did their debts. From 2009 to 2014, the company lost 300 million dollars. As the person responsible, Charney missed out on the installation of a new structure that was able to keep up with the growth. After an operational inspection 1800 employees were forced to quit because they didn’t have a working permit.

In 2011, Dov Charney was sued by 4 girls who all accused him of sexual harassment. This of course caused a scandal, also because the private texts and photos of those concerned were published in the media. Eventually, the cases were settled out of court thanks to a clause in the employment contracts that discharged American Apparel from every claim. However, during the same year the company avoided a bankruptcy for the first time. The accusations against Charney didn’t stop, but the board refused to step into action. Quite the opposite: They extended his contract as the CEO of the company.

In 2013 a new automatically functioning marketing base proved to be the worst nightmare: Due to an error in the software, no goods could be delivered. Charney himself stepped into action and built a camp inside the company headquarters to reduce the harm already done. 

Dov Charney
Credit: Gary Friedman

At the beginning of 2014, the board finally looked deeper into the accusations against Charney. Until then, the strategy had been to settle all cases outside of court, but this was becoming more and more expensive. All in all, the company paid around 4.5 million dollars to ex-workers, and the members of the board were therefore forced to think about a future without Charney. At the end of 2014, I read the surprising news that he was being fired from his position. However, it was not because of the decreasing sales figures (in March 2014 the company again only just avoided bankruptcy); if anything it was because of Charney’s private escapades. The board called it 'suspected misconduct'. For the CEO himself, this operational step came as a surprise during a meeting in New York. He was just about to present the first good figures in weeks and to reveal the design of a new sneaker collection when they confronted him.

As always, there are 2 different versions of the events. There were people who claimed that Charney used the internal company server to save mementos of all his sexual escapades in the form of pictures and videos. In addition, he was accused of misappropriating company funds. Some say that the board didn’t even know about the clause in the employment contracts that discharged American Apparel from any claims.

Then, there is the other side: For them, Charney is the victim of an understanding between several people who had the goal of getting rid of him as the player with the most shares in the company. From this point of view, all of the accusations made by the board were unsustainable. The server was made available for Charney to create a comprehensive record of the company. It was argued that the board always knew about the accusations and only stepped into action because they could no longer turn his lifestyle into more money. 

Credit: Courtesy of American Apparel

The board made him choose between working as a creative director for $500 per hour without any voting rights, or leaving the company completely. Realising how serious they were, Charney tried to gather as many investors as quickly as possible in order to get rid of the board members. During the following weeks, he took out a loan of 20 million dollars to buy as many shares as possible so that he could regain control of the company. Unfortunately, the plan failed because the board members established a new regulation that made his new shares worthless.

Charney hit back with a complaint against his own company. Details that surfaced from the court records leave an impression of how dirty, recklessly and tirelessly both parties fought. Just by looking at the means the board chose clearly illustrates how much they wanted to dump Dov. Eventually they won; he did not return, and in December Paula Schneider was announced as his successor.

It was Schneider’s goal to establish young adults as a new target group and to put a refreshing perspective on the company: from 'nudity and blatant sexual innuendo' to 'confident and natural beauty'. Of course, this wasn’t the only mammoth task that she had on her shoulders. It seemed ill-fated from the very beginning. Just 10 months later, in October 2015, American Apparel was forced to file for Chapter 11 bankruptcy. In this way the company was kept active and running, with the mission of saving themselves through reorganization and restructuration.

From that point on, the company strived for a more efficient product range. They painted their shops in a new colour, employed more women and once again made a political contribution. American Apparel was one of the first companies to work together with the 'New Opportunity Fund', an organisation that has the goal of gaining citizenship for illegal but suitable immigrants. However, it seemed that the elimination of Dov Charney was American Apparel’s last successful mission. The damage was done, the debts increased and the time was too short to steer the company into safe water.

Paula Schneider
Credit: Unknown

In November 2016, some say under the guise of the media reporting about America’s new president, the company filed for bankruptcy. After a few rounds of negotiations, Gildan Activewear bought the company for 88 million dollars. Gildan is a textile company based in Montreal with an annual turnover in 2016 of 2.6 billion dollars. This company produces everything textile related. Among other things they manufacture 'Under Armour' as a licensed brand.

At first, it wasn’t exactly clear what the plans were for American Apparel, but a short time later it transpired that the shops and the employees weren’t part of the deal and clothing production was halted. In April 2016, many workers protested by sitting naked in the American Apparel shop windows. Settlements and wages that were still pending weren’t paid, the shops were no longer supplied and eventually closed, and the employees were left in the dark. This resulted in an international protest by all workers in Europe to draw attention to the actual conditions.

'We’re not politically correct, but we have good ethics.' I remember this was one of the slogans hanging in one of the stores. It’s safe to say that nowadays there isn’t anything left from the once fair image that was lived and embodied by American Apparel. So, what does the future hold for American Apparel? Of course ownership of the shops could be interesting for a new buyer, but their time is over: '90% off entire store', 'Thank you for your business'. Then again, American Apparel made a comeback online. You can now choose the origin of your product between a foreign country or America – the latter with an extra charge of 25%.

American Apparel, Lower East Side | New York. May 2017
Credit: Martin Hufnagel

While writing this article, the thing that struck me most was the short amount of time that passed between being hot and being over the top. It’s frightening how quickly you have to pay the price if you’re haven’t established an efficient and strong structure. I know, I know… that’s old news. Fashion is a fast paced environment, where customers aren’t loyal and competition is extensive. Please hurry, the show must go on.

That goes for Charney too. What’s he up to today? After the lawsuit swallowed all of his financial (and perhaps mental) resources he went back to his roots. He publishes pictures of countless locations in LA on, operates an Instagram account with around 8000 followers and does what he does best: t-shirts.