By Ben Fractenberg
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.