Re­tailer plans at­ti­tude re­vamp

Los Angeles Times - - BUSINESS - By Tif­fany Hsu tif­fany.hsu@la­

Amer­i­can Ap­parel says it will at­tempt to purge its mar­ket­ing of the overt sex­u­al­ity for which it’s known.

Amer­i­can Ap­parel Inc.’s new lead­er­ship be­lieves that the re­tailer can some­day be­come a $1-bil­lion com­pany — but only af­ter an over­haul of its at­ti­tude and op­er­a­tions.

In its lat­est ef­fort to dis­en­tan­gle it­self from months of in­ter­nal tur­moil, the Los An­ge­les com­pany Mon­day filed a plan with the Se­cu­ri­ties and Ex­change Com­mis­sion out­lin­ing where its stores should be based, who they’ll be tar­get­ing and how.

In an­other fil­ing, Amer­i­can Ap­parel said it planned to form an ad­vi­sory com­mit­tee to help guide Paula Sch­nei­der, who be­came chief ex­ec­u­tive in Jan­uary af­ter pre­de­ces­sor and com­pany founder Dov Char­ney was fired in De­cem­ber.

In an in­vestor pre­sen­ta­tion ti­tled “Chaotic to Iconic,” Amer­i­can Ap­parel said it would at­tempt to purge its mar­ket­ing of the overt sex­u­al­ity for which it’s known, while also tight­en­ing and bet­ter track­ing its de­sign and sales pro­cesses.

The com­pany said it would avoid the “bla­tant sex­ual in­nu­endo” and “in­ap­pro­pri­ate sex­ual poses” of its for­mer ad­ver­tise­ments, which of­ten fea­tured women with their legs splayed in a way that was “of­fen­sive to many.”

The com­pany, which had $609 mil­lion in rev­enue and 242 stores at the end of 2014, said it hoped to evolve into an en­tity with $1 bil­lion in an­nual sales. To do so, Amer­i­can Ap­parel said it planned to perk up its “stag­nant re­tail prod­uct,” stream­lin­ing its of­fer­ings 30%, while im­prov­ing its plan­ning and com­mu­ni­ca­tion to avoid costly over­time and over­pro­duc­tion.

The com­pany said it has too many stores in New York and Los An­ge­les and that the rents for some for­eign out­posts are too high.

Look­ing ahead, Amer­i­can Ap­parel stores should be based in ar­eas with high an­nual house­hold in­comes and more than 400,000 res­i­dents, with the ex­cep­tion of col­lege towns, ac­cord­ing to the pre­sen­ta­tion.

Stores, which range in size from 1,200 to 3,500 square feet, should be 2,500 square feet for stand-alone prop­er­ties and 2,200 square feet for mall space, the re­tailer said.

Amer­i­can Ap­parel also said it hoped to in­crease its whole­sale sales work­force and ex­pand its in­ter­na­tional dis­tri­bu­tion net­work, par­tic­u­larly in Europe and Asia. The com­pany said it aims to re­duce its sup­ply chain costs, pay­ing more com­pet­i­tive prices for raw ma­te­ri­als.

In a sep­a­rate fil­ing, Amer­i­can Ap­parel said share­holder Jef­frey Kolb agreed to with­draw plans to nom­i­nate two can­di­dates to the com­pany’s board. In­stead, the re­tailer will set up an ad­vi­sory com­mit­tee that will be led by Kolb choice Gene Mon­te­sano, co-founder of Lucky Brand Jeans, if he is will­ing and able.

The com­pany also promised to try to find a new in­de­pen­dent direc­tor with re­tail man­age­ment ex­pe­ri­ence be­fore the 2016 an­nual meet­ing.

An­drew Bur­ton Getty Images

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