US clothing chain American Apparel has revealed that it is facing bankruptcy. The discount retailer, which has more then 280 stores worldwide, said debts has mounted to more then $120m.

This news sent it shares down by 22% on the American stock exchange to $1.08.

The retailer expects losses to continue and warned that it may not have sufficient liquidity necessary to sustain operations for the next twelve months. These factors among others, raise substantial doubt that the company will be able to continue as a going concern. The company has faces several problems in recent months, from underperforming results to mass layoffs of illegal workers.

American Apparel targeted urban fashion tastes with items such as shiny spandex leggings and cotton t-shirts. But it has been trying to re-position itself with a more conservative ‘preppy’ look, leaving much to be desired.

This budget brand hardly comes close to other strong international brands originated in the US.

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