begin quote from:
The
odds of a white knight riding in to save all of American Apparel LLC’s
U.S. stores is looking more and more unlikely as the clock ticks on the
company’s bankruptcy process and last-minute bidders mull their options.
New …
American Apparel Stores Brace for Closures
The odds of a white knight riding in to save all of American Apparel LLC’s U.S. stores is looking more and more unlikely as the clock ticks on the company’s bankruptcy process and last-minute bidders mull their options.
New players, including Amazon
and Forever 21, are said to have emerged as potential acquirers. All
bids are due into the bankruptcy court today. That process marks the
beginning of the next phase for the business, which is expected to be
radically changed under new ownership.
For American Apparel’s
nearly 400,000 square feet of U.S. retail space, along with additional
space abroad, it’s already been a slow bleed. WWD has confirmed through
workers the planned closures of the company’s stores at the Irvine
Spectrum Center in Irvine, Calif., Third Street Promenade in Santa
Monica, Calif., and Victoria Gardens in Rancho Cucamonga, Calif. A
fourth on University Center Boulevard in Tucson, Ariz., is also expected
to close. Those stores are no longer receiving new inventory, according
to workers. A spokeswoman for the company declined comment on the real
estate portfolio.
A judge in mid-December approved the closure of nine of the company’s U.S. stores.
The timing of any significant real estate sales isn’t the great. Macy’s Inc. is set to close 63 stores
in the spring and another 32 over the coming years. Sears Holdings
Corp. is liquidating about 30 doors and closing another 150 more. The
Limited also has been struggling mightily could shut down operations.
American
Apparel filed for its second tour in bankruptcy court in November, less
than a year after emerging from its first go through. As part of its
latest filing, the company struck a deal with Montreal T-shirt firm
Gildan Activewear Inc., which is poised to acquire the intellectual
property and potentially some of the manufacturing of the company but
not its stores.
But that deal is just a placeholder.
“As
we’ve repeatedly shared with employees, personnel plans will not be
made until a deal with a buyer is complete,” the company’s spokeswoman
said. “Gildan — a leading garment company with whom we currently have an
agreement — has expressed a deep interest in retaining manufacturing
jobs in Los Angeles. That said, there is still a possibility that
another purchaser will prevail at the auction, which is scheduled for
Jan. 12. After that, a completed sale of the business would not be
finalized until the end of January at the earliest.”
The
company closed eight stores in Canada at the end of last year and 12
U.K. stores just before Christmas. Former workers on social media have
also confirmed the closures of some stores in Japan and Mexico City.
Stateside
stores, such as those in Irvine or Rancho Cucamonga, appear spartan
with undressed mannequins in some cases, half-filled walls and sparse
rounders of hoodies or sale items. The company’s end-of-year 40 percent
off everything sale in store and online, has continued into the new
year.
American
Apparel last month asked the bankruptcy court judge overseeing its case
for permission to hire DJM Realty Services LLC to oversee its real
estate portfolio for negotiations with landlords on the termination or
restructuring of leases, subleases, extensions on decisions about lease
agreements or claims in court among other services. A hearing to review
that request is set the same day the court is expected to approve a
potential sale.
If Amazon or Forever 21 were to swoop in with a bid, the company and brand could head in an entirely different direction.
Forever
21, with its growth having stalled in more recent years, is more than
likely eyeing some of the locations. Lloyd Greif, president and ceo of
investment bank Greif & Co., speculated that the firm could
conceivably step up to take on perhaps a third to half of American
Apparel’s U.S. real estate portfolio.
There is also a chance that companies could partner on a bid.
“You
could see any of these [companies] could do it by themselves or they
could do it in combination,” Greif said. “Whenever you have a bankruptcy
auction like this, people say ‘Do I want to bid this thing up?’ That is
certainly a possibility not to be ruled out.”
Observers who are keeping tabs in the American Apparel bankruptcy believe that Amazon could want some of the chain’s stores. Amazon has also been building out a private label business, feeding its growing interest in fashion.
The
possibility of the two newest names — Amazon and Forever 21 —
partnering on a bid is not as likely as perhaps, for example, an Amazon
and Authentic Brands Group joint bid, Greif said.
Others cite ABG’s
most recent deal for bankrupt Aéropostale — it partnered with General
Growth Properties and Simon Property Group to have them operate the mall
stores while ABG kept ownership of the intellectual property assets —
as an example of ABG’s flexibility and openness to these kinds of joint
venture deals. ABG could also buy the entire company, and then
simultaneously flip the parts it doesn’t want — the stores — to an
already interested buyer, such as Amazon.
Over the
last few months there’s been talk in the marketplace that Amazon was
even interested in other properties, such as some Sears’ stores, so it
could expand on its brick-and-mortar ambitions. But unlike most firms
that would use the floor space to sell things, the thinking is that
Amazon really wanted to build out its own set of local warehouses so it
can have ready inventory on hand to expand its same-day delivery
service, as well a provide a point for pickup of orders placed earlier
in the day.
Still, things have a way of turning very quickly in the case of American Apparel.
Color
Image Apparel Inc., which emerged in early December as a potential
bidder in the firm, took a closer look at the company but industry
sources say the firm — parent to the fast-growing Alo Yoga brand along
with the Bella Luxx and Bella + Canvas lines — dropped out of the
running after completing initial due diligence.
Related stories
In Fashion Push, Amazon Puts Ad Dolla 
No comments:
Post a Comment