American Apparel May Have to Close Some Manhattan Locations, Report Says

By Ben Fractenberg on August 19, 2010 7:24am 

An advertisement for an American Apparel retail store is displayed on August 18, 2010 on the Lower East Side. Shares of American Apparel have fallen 67 percent this year following news from the casual retailer that it expects a net loss of up to $7 million and that it has received a federal subpoena over its change in accounting firms. The chain may also have to close some locations in the city.
An advertisement for an American Apparel retail store is displayed on August 18, 2010 on the Lower East Side. Shares of American Apparel have fallen 67 percent this year following news from the casual retailer that it expects a net loss of up to $7 million and that it has received a federal subpoena over its change in accounting firms. The chain may also have to close some locations in the city.
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Spencer Platt/Getty Images

By Ben Fractenberg

DNAinfo Reporter/Producer

MANHATTAN — It looks like more bad news for hipster retailer American Apparel. Manhattan real estate brokers expect the financially struggling chain will be forced to close or sublet a third of its New York stores, Crain’s New York reported.

The brand, which produces all their clothes in the U.S., saw a 92 percent drop in net income from 2008-2009 according to financial report released in the spring. During that time they were still busy adding stores.

“They did their big push in '06, '07 and '08, when rents were highest,” real estate exec Ariel Schuster told Crain’s. “Their target audience was wider than most, so they went to these places where no other apparel tenant will go, like the Lower East Side.”

Richard Hodos, an executive at CB Richard Ellis, told Crain's that stores in popular shopping areas, such as the Flatiron District and the Upper West Side, would be easier to lease than neighborhood locations, such as the TriBeCa store.

But trendy Manhattanites seeking purple leggings and multicolored V-necks can breathe easy for now. A spokeswoman for the company told Crain's they did not have plans to close any city stores.

But that might be difficult as the economy continues to struggle.

Other brokers expect American Apparel to shutter stores in neighborhoods where they have more than one location, such as SoHo.

The company lost money again in the second quarter of this fiscal year. Their growth profit was between 50 percent and 52 percent, down from 59 percent last year, the Daily News reported Tuesday.

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