American Apparel won’t be fully ‘Made in U.S.A.’ anymore, Gildan says

MONTREAL – Some American Apparel branded clothing will be made outside the United States for the first time, the CEO of its new Montreal-based owner said Thursday.

CEO Glenn Chamandy of Gildan Activewear said the company will use contractors in the U.S. to manufacture most American Apparel clothes, but some garments will be made at Gildan factories elsewhere, where labour costs are cheaper.

“The lion’s share of what they sold will continue to be made in the U.S.A.,” Chamandy said in an interview.

“But we’re also going to offer customers a choice and have another product that will be made in one of our existing facilities that will allow them to have a better price point.”

A spokesman for Gildan later said American Apparel labels will be made either in Honduras or Nicaragua, depending on the type of clothing.

Gildan (TSX:GIL), which makes T-shirts, socks and underwear, recently bought the bankrupt California-based American Apparel for US$88 million. The deal did not include American Apparel stores nor its e-commerce site.

Founded by Quebec native Dov Charney in 1989, American Apparel rose to prominence after opening manufacturing facilities in Los Angeles and attracting a young clientele using sexually provocative ads. It twice entered bankruptcy protection over the past two years prior to its sale to Gildan.

American Apparel frequently boasted that its clothes were made in sweatshop-free facilities in L.A., even mounting an ad campaign featuring a topless model that subtly referred to rivals that used facilities in Bangladesh, where workers were paid a fraction of what its employees earned.

While the “Made in U.S.A.” feature attracted some customers, Chamandy said American Apparel was losing business to competitors that offered similar products to screenprint customers at much lower prices.

The company hasn’t yet decided if American Apparel labels sold directly to customers will continue only to be made in the U.S., Chamandy said.

He said he’s not worried about alienating loyal American Apparel customers or even raising the ire of President Donald Trump, who has publicly shamed companies that produced goods outside the U.S.

“We’re offering them ‘Made in the U.S.A.’ at the end of the day, so it’s not like they can’t get what they had before,” he said.

Gildan raised its quarterly dividend for a fifth consecutive year after posting strong results for the latest quarter and fiscal year. The company will pay 9.35 cents per share payable April 3, up from 7.8 cents per share.

The company, which reports in U.S. currency, earned $74.3 million or 32 cents per share in the fourth quarter, up from $67.6 million or 28 cents per share in the same period last year.

Revenue for the three months ended Jan. 1 was $587.9 million, an increase from $543.8 million a year earlier.

For the full year, it earned $346.6 million or $1.47 per share on $2.58 billion of revenues.

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