American Apparel struggles with debt, falling stock

American Apparel’s future may be uncertain, but the company says it has no plans to close its New Haven branch.

The Los Angeles-based clothing chain is struggling under more than $120 million in debt and its stock price has lost more than 65 percent of its value over the past year. The New Haven branch’s landlord said he has not received any notice the store is closing but thinks the company’s uneasy financial situation is troubling.

Despite the international chain’s weakened financial position, American Apparel said it will not file for bankruptcy or close local branches to cut costs.

“There is no plan to reduce the size of the company’s workforce or close any of the company’s stores at this time,” said spokesman Ryan Holiday. He added that the company has “no reason to apply for bankruptcy and is therefore obviously not planning to do so.”

Still Thomas Vitagliano, who owns the retail space that houses American Apparel’s New Haven store and is director of the Yale Mall Partnership (which rents several other commercial spaces on Broadway including Educated Burgher and Blue Jay Cleaners), said up to this point, American Apparel has not indicated how its financial situation might impact the New Haven branch, which opened 15 months ago.

Vitagliano said the only updates he receives on American Apparel’s future come from the media.

“They haven’t given us any indication there’s a problem,” Vitagliano said. “They only tell me what was reported in the paper and that was it. That’s the way corporations work.”

American Apparel has received national attention in recent weeks as the company’s stock prices have plummeted to a low of $0.72 a share, down from the company’s high in December 2007 of $15.02. Sales for stores that have been open for at least a year declined 16 percent, according to the company’s second-quarter earnings report.

Employees at the Broadway branch deferred comment about the store’s future to American Apparel’s press and human resources department.

Nine American Apparel customers interviewed over the last week said they would have mixed emotions if the New Haven store closed.

Kate Harrington and Deanna Gebele, freshman at Quinnipiac University in Hamden, said they did not know the store was doing poorly.

“I’m a little sad just because they have some real gems and vibrant shirts in there,” said Harrington, “But thank God I just bought something!”

The two students went on to say they would be indifferent if the store closed because they would rather see stores like Victoria’s Secret, Forever 21 or H&M come to New Haven.

The company’s edginess was one reason why University Properties did not want to lease a University Property building to American Apparel two years ago. “University Properties was not interested in trying to find a space for [American Apparel],” when the company approached the University about expanding into New Haven two years ago, said Bruce Alexander ’65 University vice president for New Haven and State Affairs and campus Development.

The New Haven branch of American Apparel currently employs more than 15 people, as does the company’s other Connecticut location in South Norwalk.

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