What would an American Apparel acquisition do for Amazon or Forever 21?
Amazon.com and Forever 21 are among a group of companies considering bids for bankrupt American Apparel, according to news reports.
Any company entering the bidding for American Apparel knows it must top the $66 million stalking horse offer made by Gildan Activewear, a Canadian apparel manufacturer, in November. Gildan’s bid is for American Apparel’s manufacturing and not its stores. Sources, according to Reuters, expect a decision on bids to be made as early as next week.
With its manufacturing in California, American Apparel will give whatever company that acquires it a means to respond more quickly to fashion trends than rivals that source their apparel from Asian countries.
In the case of Amazon, the e-tail giant has been making an aggressive push into apparel in recent years including rolling out the private labels, Buttoned Down, Franklin Tailored and Lark & Ro.
Amazon acquired Zappos.com in 2009 and allowed the company to continue operating as an independent entity. A Bloomberg article suggests that this is a tact that Amazon might take should it be successful in acquiring American Apparel.
“While I’m not going to handicap the likelihood of this particular rumor,” Ed Yruma, managing director of KeyBanc Capital Markets, told Bloomberg.” I do think we will see them mentioned more frequently as a buyer of apparel brands.”
Should Forever 21 succeed in a bid for American Apparel, it would seem unlikely that the company would have an interest in the brand’s stores. Last year, reports surfaced that Forever 21 was in talks with landlords to reduce its footprint in some malls across the U.S.
The other inconsistency in a Forever 21 bid for American Apparel is price image. Forever 21 is a low-price merchant while American Apparel’s domestically made clothing is pricier than goods sourced from developing nations.
Whichever company acquires American Apparel will be on the right side of the current political dialogue in the U.S. Donald Trump made keeping and repatriating manufacturing jobs in American one of the pillars in his successful run for the White House.
- Amazon, Forever 21 vying for bankrupt American Apparel: sources – Reuters
- Amazon-American Apparel Deal Would Please Fashionistas and Trump – Bloomberg
- Can Amazon dominate apparel with its own private labels? – RetailWire
- Will Amazon button down the menswear category with its new private label line? – RetailWire
- Is fast-fashion slowing down? – RetailWire
DISCUSSION QUESTIONS: What would an acquisition of American Apparel mean for Amazon.com or Forever 21? Should either be successful in their bids, what would it mean for their competitors?