American Apparel have revealed that they might have to close down in the next 12 months. The high street giant released a statement this week in which they admitted there was "substantial doubt that we may be able to continue".
American Apparel could fold in the next 12 months
"We believe that we may not have sufficient liquidity necessary to sustain operations for the next twelve months," read the release from the brand, who reportedly failed to meet a scheduled debt repayment to one of its major lenders on Monday. "These factors, among others, raise substantial doubt that we may be able to continue as a going concern."
The Los Angeles-based label also revealed that it was near bankruptcy, announcing plans to extend its credit from $50 million to $90 million, despite expecting losses for the rest of the year. The statement also showed that sales for American Apparel were down 17 per cent in the last quarter, a result following multiple store closures.
"The decline in comparable sales was attributable to the lack of new style introduction for the spring and summer selling season," read the press release.
The news of the company's imminent closure doesn't come as a huge surprise to industry insiders – the brand has been posting losses for the last five years, with its market value shrinking from $540 million to $90 million.