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One of the most popular clothing manufacturers in the USA, American Apparel is a well-recognizable brand all over the world. Along with manufacturing clothing, the company is into whole sale and retailing also. The most popular products are t-shirts, underwear and in recent times it is also producing leggings, tank tops, denims and other different accessories for every one. The company was formed in 1989 by Doy Chaney, a Canadian. Initially, the company had a number of shifting, but in 1997, they relocated to Los Angeles. Here they became partners with Sam Lim and had a shop with 50 workers. After the company gained success in the wholesale brand they targeted the retail market and had more than $211 million revenues in 2005. In late 2006, the company went for a reverse merger and in the process Endeavor Acquisition Corp bought it for $360 million. After the closing of the merger at the end of 2007, it became a public trading company. Charmey became the CEO of the company in 2007.The same year the company sold products more than $125 million domestically. Along with that the company also promotes a number of different immigrant policies and labor policies that make the company attractive to work for outside the United States of America.
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It has a huge manufacturing unit in downtown Los Angeles. It also has its own fabric dye house, a knitting factory and also a garment dye house. The company claims that they can produce 1 million t-shirts in a week and as per the records provided by the New York Times, it is the largest single garment factory based in the United States. A total of 4000 people are employed in the two different buildings of the company. All of these make the company one of the best to work for and as the price range the customers also like to buy the company`s products.
Financial Analysis
In accordance to September 30, 2011 (third quarter), the company has accounted for about 3% rise in net sales in comparable store. During the same period the company has registered 10% rise in wholesale business net sales. However, in the context of overall net sales the company has a total of $140.9 million making a net sales increase of about 5%. During the same period of time, there was an increase of $4.8 million or 7% in the context of gross profit. As per EBITDA adjustment through consolidation, the company shows an overall increase of $6.4 million against a loss of about $800 000 during the same period in the last year (2010). However, there is a slight loss in the context of common share prices. The company has incurred a loss of $0.07 per share in the third quarter of 2011.
Recommendation
American Apparel is one of the most important American garments companies in the world hence it has got its place in the market. But it is important to find out new markets for the company so that it can gain more and more profits. The company has shops throughout America and it should look out for markets outside North America. We can say that there is a major market of t-shirts and other apparels in Latin America and some Asian countries like China and Hong-Kong. Most importantly, if the company can catch up the markets of Asia and Latin America, the selling will increase immensely in case that there are some other companies which have established their markets in these areas. So initially, the competition will be stiff. But the business strategies will have to be different for each of the regions as well as the promotional and marketing strategies. The company is also making accessories, so there should be a proper market survey about which types of accessories are popular in each part of the market. This will give the company a good lead to start with.
Another very important thing will be recruiting some people who will look after new processes and supplies. We can surely have a look at people who live in the regions as they will have the best ideas about the market and what is good for the people there. Thus, the local people will also have employment chances and that will surely increase the good will of the company in an international scale. It is important to do a market survey and understand the market shares of each apparel company working in the region, so that it can give the company management an idea about the potential competition.