American Apparel, an popular American fashion brand known for its US-manufactured clothing and provocative advertising, recently went bankrupt and was sold to Gildan, a Canadian fashion company that operates internationally. According to Market Watch, Gildan believes the company still possesses a lot of potential, especially abroad, and thus purchased it for $88 million.
Despite the purchase, many experts believe that American Apparel’s time has passed and that their prior success cannot be restored. Vivaldi CEO and Founder Erich Joachimsthaler concurred, noting, “American Apparel was a marketing machine that had basically run its course. What American Apparel was able to do was astounding. It was selling sex and doing it in a way that we could not believe. That’s no longer cool.” However, some analysts do speculate that the brand could perform strongly overseas and can compete on price point by shifting production over to Gildan’s facilities in Honduras.
Over the past year, Gildan’s stock price went down 6.4%, whereas the S&P 500 as a whole is up 19.5%. It would seem that Gildan is taking a risk in order to revamp their shareholder value. But the question remains of whether that risk will pan out, or if it will only push Gildan further off course.