Bankrupt U.S. retailer American Apparel starts layoffs

Mon Jan 16, 2017 6:44pm EST
 
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By Jessica DiNapoli and Lisa Richwine

(Reuters) - American Apparel LLC said it had started to lay off staff on Monday, after Canadian apparel maker Gildan Activewear Inc (GIL.TO: Quote) withdrew its initial plan to acquire some of the bankrupt U.S. fashion retailer's manufacturing operations.

Gildan won the rights to American Apparel's brand with an $88 million bid in a bankruptcy auction last week. It had previously indicated it would assume some of its manufacturing operations, which had made the brand synonymous with "Made in the U.S.A."

American Apparel spokeswoman Arielle Patrick said the company was laying off about 2,400 workers in Southern California. The company had 2,166 employees at its headquarters in Los Angeles, and 959 employees at the nearby South Gate manufacturing facility.

Francisco Morales, 56, who made clothes for seven years at the Los Angeles plant, was one of the American Apparel workers to be handed his employment termination notice and his last paycheck on Monday.

"It's really bad what happened here, really bad," Morales said in Spanish, according to a co-worker who translated into English. He said he had three children and was worried about finding another job with the same benefits, because of his age.

"The company issued a WARN Act notice several months ago, letting employees know that depending on the buyer of the business, a sale could result in eventual shrinkage of some business areas," American Apparel said in an emailed statement.

Last week, American Apparel reached a preliminary deal to sell its Garden Grove manufacturing site to textile manufacturer Broncs Inc, re-launching it as a knitting and dyeing facility.

"The company is pleased that it was able to secure a second agreement with Broncs, which plans to save over 300 jobs when they take over the Garden Grove facility," the statement added.   Continued...

 
An American Apparel store logo is pictured on a building along the Lincoln Road Mall in Miami Beach, Florida March 17, 2016. REUTERS/Carlo Allegri