American Apparel brand to appear on products not made in the USA

[MONTREAL] American Apparel, a brand that developed a following by making clothes in the US at a time when garment makers sought cheap labour abroad, is changing its original mission under new ownership.

Canadian manufacturer Gildan Activewear Inc, which bought American Apparel for US$88 million in a bankruptcy auction this month, will continue producing some of clothes in the US. But it will also slap the brand on cheaper wares made elsewhere as it expands into international markets.

"We're going to do a combination of both," CEO Glenn Chamandy said on an earnings conference call with analysts Thursday, when asked about manufacturing plans for the brand. "We're going to continue to support their core made-in-USA business, but we're also going to offer a product where they couldn't compete before."

Gildan has built a global production chain ranging from yarn-spinning to clothes-stitching, which has enabled the Montreal-based company to compete with Hanesbrands Inc and Berkshire Hathaway Inc's Fruit of the Loom. Gildan's socks are the only finished goods made in the US, and most of the sewing is done in the Caribbeans, Central America or Bangladesh.

Gildan has been focusing on American Apparel's screen-printing business, which offers T-shirts and other items to wholesalers. The company, which didn't buy any American Apparel stores in the bankruptcy auction, said it's still working on a "consumer positioning for the brand".

Once a highflying retailer that peaked at more than US$600 million in sales, American Apparel is expected to contribute between US$50 million and US$75 million to Gildan's revenue this year, according to the company.

Gildan sees room to raise both wholesale and retail prices if the Trump administration decides to impose a border tax. Still, that tax would be disruptive and hit all garment manufacturers, Mr Chamandy said. Gildan buys most of its cotton from US vendors.

"Other than American Apparel, there's no apparel made in the United States," he said.

BLOOMBERG