American Apparel gains court approval to close nine locations by end of the year

Los Angeles - Earlier this month, the Los Angeles-based retailer confirmed that it would not go through with its 3,500 layoffs of employees. Instead, American Apparel put into motion a request to close nine of its stores, which recently just got approved by a court judge order.

The basics apparel company requested that these specific nine locations be shuttered because they were under-performing in terms of sales. These locations are based in Evanston, Illinois; Seattle, Washington; Atlanta, Georgia; Santa Cruz, California; New York, New York; Burlington, Vermont; Dallas, Texas; Memphis, Tennessee; and Washington, D.C. According to WWD, the judge approved this nine closures on Monday, December 19.

In addition to this closure, the judge also approved a liquidation plan with Hilco Merchant Resources LLC and Gordon Brother Retail Partners LLC. This plan will directly affect any future closures for the stores and will have an impact on American Apparel’s inventory from these locations. On the retailer’s part strategically, it’s not a bad move to close these under-performing stores, as its more likely to find a retail buyer with less of its locations still operating. As reported by WWD, the retailer had told the judge that finding a buyer to purchase all 107 locations was “unlikely” while attempting to gain approval for shuttering the stores.

American Apparel closes under-performing stores in U.S.

These nine locations are expected to close before the end of the year is up, which is less than two weeks away. According to the Wall Street Journal, these stores have already been facing difficulties prior to announcement. “[Store] managers at several of these store have resigned, increasing the challenge of continuing to operate them during the holiday season, Joseph D’Ascoli, managing director at Berkeley Research Group, said in a filing with the U.S. Bankruptcy Court in Delaware.

Due to these closures, American Apparel will bring in about 600,000 dollars in gross sales. For 2017, it is also expected that more stores will close in the future although the locations are not yet stated. At the moment, Gildan Activewear Inc. still remains in the running for American Apparel’s intellectual property. As the main bidder, the company is expected to purchase American Apparel and its assets for 66 million dollars.

Photo: American Apparel