American Apparel: All News Is Bad NewsS

Yesterday came the first real signs that American Apparel could soon face bankruptcy. Today, the news for Dov Charney's breast-covering empire grows darker: a shareholder lawsuit, rumored store closings, a stock that's still plummeting, and disgruntled employees emailing us.

Yesterday's AA financial reports sent the stock down nearly 30%; today, the close of the market saw it fall another 22%, to only 82 cents a share.

In New York, where AA is practically the fashion version of Starbucks, the great contraction seems inevitable. Crain's reports that AA says there are "currently no plans" to close any of its 20 Manhattan and Brooklyn locations, but retail analysts suspect that neighborhoods with multiple stores, like SoHo and downtown Brooklyn, could see closures.

And in L.A., a more immediate problem: AA shareholders have filed a lawsuit against the company for mismanagement. The chilling thing is that the entire suit is simply a factual list of things that have happened to the company, most of which can be found by reading our archives. But taken together, they sure do sound horrible.

Yesterday, we asked for any interesting highlights of the weekly AA conference call between Dov Charney and store managers. We hear nothing out of the ordinary happened—"Nothing but Dov in complete denial and ranting about mannequins for about 40 minutes," said one listener. But a tipster did send us this little Facebook conversation between the managers of two different AA stores. Sounds like business as usual! For now.

American Apparel: All News Is Bad NewsS



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