American Apparel: Drowning In Debt? Case Study Analysis

3383 words - 14 pages

Accounting for Decision Making
American Apparel: Drowning in Debt? Case Study Analysis
Prepared by Group 7-section A: Ambika Ravi Shankar - 14009
Ashish Sopori -14018 Ashvita Ganesh - 14020
Tamilarasi Rajappa - 14066 Pragadeeshwaran Selvaraju - 14075
IMT Dubai

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Introduction
American Apparel, is an American multi-national clothing manufacturer, distributor and retailer since 1988based in Los Angeles, California. Dov Charney, a Canadian business man was a founder and former CEO of the company. He was involved in nearly every part of the business process from design and manufacturing to marketing. The Ernst & Young named Charney Entrepreneur of the Year in 2004. He was also termed "Man of the Year" by various fashion magazines. American Apparel is about vision, passion, intensity, brand-free, sustainable, fair wages, solar power, recycling, creativity and the can-do spirit", according to CEODov Charney. American Apparel is known for their creative campaigns, print advertisements and own designs. The company promotes provocative and controversial advertising campaigns, which is largely the inspiration of the former company CEO, Dov Charney. The company was ranked 308th in the Inc. 2005 list of the 500 fastest growing companies in the United States, with a 440% three-year growth and revenues in 2005 of over US$211 Million.
General facts on the global clothing industry
The world clothing and textile industry (clothing, textiles, footwear and luxury goods) reached almost $2,560 trillion in 2010. The world market for textiles made from organically grown cotton was worth over $5 billion in 2010. In 2010, American households spent, on average, $1,700 on apparel, footwear, and related products and services.
Apparel and textile are among of the worlds' largest industries Total Global apparel exports are worth approximately USD 412 billion (2011) and global textile exports USD 294 billion.

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General facts about the company
1) American Apparel (NYSE: APP) is focused on growing by enhancing the number of stores, building good online sales platform, bringing new merchandise for the users and creating strong Information Systems to support Operations.
2) In 1997, it started expanding & establishing manufacturing units in South Carolina and Los Angeles, and as of today the apparel manufacturing operations have spread to 800,000 sq. ft. of facilities in the warehouse district of downtown LA.
3) Its controversial CEO, Dov Charney had been able to sustain the business, with
continued borrowing at an exorbitant rate (up to 18%) and additional capital.
4) During 2009, a federal investigation turned up irregularities in the identity documents of immigrant workers from when they were hired. 2000 workers were terminated, leading to an inability to fulfill the demand.
5) As of Feb 28, 2014, the company had approx. 10,000 employees & 246 retail
stores in 20 countries. The company has business in the United States, Canada, Mexico, Brazil, United Kingdom,...

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