The brand's debt continues to grow. It totalled $120.3 million as of June 30 and sales were down by 16%.

Faced with this grim reality, the brand admitted it may not be able to continue operating into next year. It says it does not have enough cash to stay afloat.

According to some analysts, founder and current CEO of American Apparel, Dov Charney, does not have what it takes to run the business.

The company has been the subject of several lawsuits which have greatly damaged its image.

In addition to being accused of unfair dismissal and sexual harassment, the brand also had to pay $5 million to Woody Allen for using his image without permission.
Shares of American Apparel dropped 26% on Tuesday (August 17) in New York.
Other sources state that a British-based private equity firm, Lion Capital, is the reason why American Apparel is surviving at this point. Having taken loans that will mature in 2013. 


Also, according to Reuters

Former employees said Charney's championing of the blue-collar workers at his factory contrast with the low compensation and high demands placed on the creative staff.

One former staffer said most of the strongest employees have left, leaving Charney surrounded by less experienced staff who don't know how to translate fashion into sales.

"Just like a lot of people in the fashion world, he got sucked into thinking he was a fashion icon," said this source. "I think he has this idea that he can do it all on his own and have a bunch of creative kids around the office."

That may be why the company has veered away from its strength in basics to sell more complicated, higher-priced clothing. At a recent store visit, jodhpurs and embellished blouses were on display, with some items costing as much as $79. Charney recently told analysts it takes up to 40 people to make a pleated pant.

"They're trying to be a fashion brand. And they're having sewers who are good at T-shirts make pants," the former employee said. "They're hard to make and hard to sell to a lot of people. A lace bodysuit isn't for everyone."
 I did notice that they revamped their collection from basics to something trendier, like cropped tops! Not sure if they are starting some trends but I personally like how they changed up their collection because I thought it was utterly boring before. Of course, I definitely don't agree with the nicer tops, which cost like 80 bucks, but if the reason for the higher price is due to labour reasons, I guess I understand. But still props to them for taking a risk and trying to make certain styles trendy. But the statement in bold above is right, a lace bodysuit isn't for everyone. Generally speaking, slim people definitely make clothes appear nicer, but AA, with their racy reputation and all, their styles pretty much only suits skinny people.

All I've got to say is now my cousin and I would have to go stop by at the Wholesale place and start ordering a bunch for cheap!

As much as I don't want to see them close down, I'm kinda excited for their super sales (assuming if they go that direction to make money).