American Apparel may have some new suitors. Amazon and Forever 21 have reportedly been toying with the idea of acquiring the vying for the troubled clothing retailer.
In fall 2016, American Apparel, which has more than 115 stores in the U.S., filed for Chapter 11 bankruptcy for the second time in 13 months with more than $177 million in debt. Soon thereafter, a handful of companies expressed interest in buying American Apparel, but no solid deals have come through yet. In November, Gildan Activewear was rumored to be taking over American Apparel, but experts were still uncertain at the time. Gildan’s current offer is $66 million, which is seen as a stalking-horse bid, and includes keeping manufacturing plants in southern California to employ more than 3,500 workers.
Other companies that have perked up at the opportunity have included Authentic Brands Group LLC, Iconix Brand Group Inc., Next Level Apparel, Sequential Brands and investment firm B. Riley & Co.
Some of the appeal of owning American Apparel, experts say, is the political issue of keeping jobs stateside. The clothing company, which is one of the biggest garment companies in the country, makes a point of relaying its brand’s theme of “Made in the U.S.A.,” especially when its main manufacturing plant resides in California, the state with the most expensive labor costs.
Amazon recently started to dip into the apparel business, one button at a time, with its “buttoned-down” new menswear brand. The non-iron, 100 percent supima cotton comes with a money-back guarantee that is “unconditional,” according to the company. A purchase of American Apparel could be a foray into expanding Amazon’s clothing options.
American Apparel has had trouble over the years. Beyond diminishing consumer interest, a PR scandal was centered around cofounder and former CEO Dov Charney, whose antics were beloved by some and called criminal sexual harassment by others. Charney attempted to buy back his company last December, without success.
The deadline for offers is this Friday, with an outcome from the auction happening next week.