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Contents Letter To The CEO // Page 2-3 Letter To The Shareholders // Page 4-5 Mission Statement // Page 6-7 Company Overview // Page 8-11 Financial Summary // Page 12-15 Retail Products // Page 16-21
CONTENTS | 01
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LETTER TO THE CEO | 03
Letter To The Ceo
Clothing manufacturing is a very tough job, but we’ve always tried to do things differently. In the early days we talked about “sweatshop free”. Though now we talk less, we still continue to provide the same benefits (and more) to our workers. For us “sweatshop free” was never about criticizing other business models; it was about attempting something new. It comes down to this: not blindly outsourcing, but rather knowing the faces of our workers and providing them the opportunity to make a fair wage. The average sewer with experience at American Apparel is making about $25,000 /yr, or $12 an hour, almost twice the federal minimum. This can be higher in some cases. We also offer parking, subsidized public transport, subsidized lunches, free on site massages, a bike lending program, a program of paid days off, ESL classes and much more. Most importantly we guarantee job security and full-time employment; this is an anomaly in the garment industry, which has historically been dominated by seasonal work. We also continue to provide all of our employees and their families with company-subsidized, affordable health insurance ($8/week, $1-3/week for children). And we just made everyone’s lives a little easier by opening an on site medical clinic. This facility, which is the first of its kind, offers primary care services along with pediatric, urgent and preventative health care. As our company continues to grow, we will further improve the work environment. Now a public company, we’re very excited about introducing an unprecedented stock program that will make our garment workers shareholders. American Apparel employs over 12,000 people worldwide. Most of those jobs are right here in the USA. Our team of sewers, shippers, cutters, dyers and creative accounts for more than 7,500 employees at our LA-area factories alone.
Their income goes back into the local economy through our employees’ purchasing power, as well as through state and city taxes on payroll and property. highest paid garments workers in the world. They are paid partially by the amount of pieces they produce and can make Every year American Apparel contributes roughly $25 million dollars in federal and state payroll taxes and with over 180 retail stores in the US, we contribute millions more in rent in cities all over the country. The jobs we create aren’t just jobs, they are good jobs that support families and communities. American Apparel garment workers are the And an employee doesn’t necessarily have to come in with prior experience. We offer on-the-job training to those willing and driven to learn. It’s our hope that the American Apparel factory can mean the American Dream for our employees. In addition to earning potential, we offer low cost benefits programs, an on-site clinic, informational sessions on health issues, and free vaccinations that keep area families healthy through preventive care, and help reserve our city’s emergency rooms for emergencies.
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Letter To The Shareholders We work to encourage healthy eating habits, promote exercise and stretching and offer complementary massages to workers to avoid on and off the job injuries. Our employee bike program not only offers free bikes to employees looking to help the environment and save money, but includes a helmet, lock and light for riding at night. American Apparel considers its workers family. It’s why we’ve dedicated the company’s power and advertising resources to publicly fight for immigration reform. A path to legalization and humane enforcement is critical for our local and national economy. Since it is an issue that weighs heavily on the families of our workers, it weighs heavily on us as well. In the handful of cases where we don’t produce a product ourselves, we work with manufacturers who share the principles we’ve built our business around. For our Made in USA nail polish line, we have partnered with a factory located just a few miles away from our headquarters in Los Angeles. Our wool floppy hat is custom made by Baron Hats, who has been in the millinery business for more than 75 years and our new dance shoe is custom made for American Apparel by Gateway Shoes in Ballwin, Missouri. You can see that in our selection of American-made classics including the Slinky and Sharpies. Even our vintage line, California Select is mostly sourced through California vendors and markets. A few of our Multi- Brand items might not be made at our factory in Downtown Los Angeles. Founder, DOV Charney
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Mission Statement Corporate Culture
Who We are?
The New Standard That Others Will Follow.
Unlike Our Competitors, We Make Our Own Product.
There is clearly much more overhead, capital investment and training involved in manufacturing in the USA, as some critics point out. But as American Apparel’s sales increase towards the billion-dollar mark over the next few years, we are confident we’ll prove that vertical integration is a viable business model that can work even better than the status quo model of continuous outsourcing. It’s not just about made in the USA. More importantly, it is about designing a business that does not, at its fundamental core, rely on the relentless pursuit of low cost labor to survive. As wages and transportation costs increase worldwide, we believe our business model of vertical integration to be the path of least resistance. For the record, American Apparel supports free and fair trade, and almost half of the company’s 250 stores are outside the USA, allowing the company to export hundreds of millions of dollars of US-made apparel annually.
The American Apparel factory is the largest sewing facility in North America. We believe that integrating our manufacturing, distribution and creative processes keeps our company more efficient than those who rely on offshore or onshore sub-contracting. By leveraging art, design, and technology at our Downtown LA campus, we are able to pay garment workers fairly AND sell garments profitably so we can sustain our business and grow. Everyone benefits - customers, workers, and shareholders alike.
Our Garment Workers Are Paid Up To 50 Times More Than The Competition A garment worker in Bangladesh earns an average of $600 a year. An experienced American Apparel garment worker can earn $30,000+ and receive benefits such as comprehensive health care. American Apparel garments are created by motivated and fairly-paid employees who don’t just have jobs - they have careers. Our culture recognizes outstanding performance and promotes from within. Most importantly, our workers have a voice and influence the direction of the company. At American Apparel we call it Sweatshop Free, a term we coined in 2002.
Investing In The Future Manufacturing in America requires risk taking and long-term investment. We think it’s well worth it. The apparel industry’s reliance on low wages cannot be sustained over time, ethically or fiscally. As labor and transportation costs increase worldwide, exploitation will not only be morally offensive, it will not even be financially viable. For us, American manufacturing is not a trend - we’ve been doing it since the day our company began in Los Angeles fifteen years ago. We are extremely proud of our model, which provides thousands of good jobs both domestically and internationally. American Apparel’s current head count is 6,000 in Los Angeles, with an additional 5,000 working at our stores worldwide.
The employees of American Apparel thank you for your support!
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Sweatshop Free. That is American Apparel What We Do? Apparel Design Creative Services Distribution Center E-Commerce Equipment Design Financial Summaries Footwear Design Human Resources Information Technology International Business Legalize & Campaign Legal Logistics Loss Prevention Maintenance / Facilities Marketing Merchandising Sales Operations Product Development Retail Merchandising Retail Operations Raise Awareness Vertical Integration Incorporate Sustainability Political Activism
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Company Overview Recycling
Renewable Energy
We strive to be as efficient as possible, creating as little waste as we can. Scrap fabric is turned into yarn for new garments when possible or used by our custodial team for cleaning. Our knit and dye houses participate alongside our warehouse headquarters to divert remaining fabric and yarn scraps, paper, plastic, wooden pallets, cardboard tubes and cones, metal and electronic waste from landfill.
American Apparel houses a state-of-the-art solar panel installation on the roof of our downtown LA factory. This system generates 150 kilowatts of clean, renewable power, contributing 15% of our energy needs.
Innovative and Creative Reuse We love putting creative ideas into practice. American Apparel donates truckloads of safe and curious excess materials to Trash for Teaching (TFT), a non-for-profit organization. TFT educates over 100 LA schools about resource management at the manufacturing level. Students make crafts from excess materials, while learning why reuse is the first step to sustainable practice. At the warehouse, we take notes on spiral pads made from old advertising and display materials, as well as the clean paper waste from offices and our Graphics Department. Our cardboard boxes are collected and reused as many times as possible rather than processed into pulp, saving energy and chemical inputs. We use recycled fiber yarns, made from our own fabric scrap, back into American Apparel product lines as hats and ties, with even more to come.
Organic Style At American Apparel we try to do everything possible to minimize our ecological footprint. By creating organic products, our business minimizes its impact on the environment, while maintaining the same comfort and style American Apparel is known for. Our Organic Collection is a selection of our most popular styles made from 100% USDA Certified Organic and pesticide-free cotton.
Transportation We enacted a bike lending program in 2005. We’ve recently increased the number of bicycles, helmets and locks that we have on hand, assuring that this free service is accessible to even more employees. We also provide a subsidized bus pass program available to employees.
Energy and Water Efficiency We executed a full retrofit of light fixtures in our factory and implemented daylight-harvesting technology, a move that saves over a million kilowatt hours of energy each year. We are also examining how to improve the efficiency of our industrial air compressors, bathroom fixtures and further modifications to our low-impact dye process that will address water filtration and energy sources.
Sourcing We are always looking for more ecologically sound materials and services. Our catalogues are printed on 100% post-consumer recycled paper with nontoxic inks. American Apparel is beginning to incorporate sustainable fabrics such as bamboo and recycled polyester into our products line. We are always looking into more recycled blends to integrate into our main line.
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Company Overview Benefits to Our Process
Our low-impact dyeing process eliminates chemical waste, providing innumerable environmental and health benefits. We use a low impact fiber reactive process to dye our organic cotton. This process uses the least amount of water when compared with all other dye processes available and the cotton absorbs over 70% of the dyestuff. The dye forms a direct linkage to the cotton fiber resulting in superior colorfastness and minimal run-off.
Dyeing Standards At American Apparel, our Organic Collection color T-shirts are dyed with low impact dye which meet industry standards for organic. It is not a requirement to label organic fibers, unlike organic foods. However, legitimacy is extremely important within the organic community. Subcommittees have formed out of already established certifying groups, mostly associated with agriculture communities. These subcommittees work together to maintain a credible level of checks and balances for companies interested in meeting a set standard and offer a guarantee the consumer can trust. Our color organics are created within the Global Organic Textile Standards (GOTS).
Cleaner Cotton Campaign American Apparel joined the Cleaner Cotton Campaign by buying 30,000 pounds of Cleaner Cotton (also known as B.A.S.I.C. cotton) to incorporate into our non-organic line. The Cleaner Cotton Campaign, led by the Sustainable Cotton Project, was created to offer farmers profitable strategies for reducing chemical use in cotton cultivation. The program also avoids the use of genetically modified seeds. In 2007, the California Environmental Protection Agency reported that 2,000 acres of Cleaner Cotton were grown, preventing
a branding strategy that spotlighted his treatment of workers as a selling point for the company’s merchandise, promoting American Apparel’s goods as “sweatshop free.”In 2008, the company took out a series of political
Political Activism As a company, we have certain resources that individual activists do not. We try to use that special ability to support political causes that need help. American Apparel regularly uses its billboards, advertisements, press contacts and even printed t-shirts to speak out about important issues. Our two biggest issues have been Immigration Reform and Gay.ads featuring the corporate logo that called current immigration laws an “apartheid system.” In regards to the company’s image overseas, advisor Harry Parnass stated that the brand is about aspiration and that they are “selling the American dream. The company has also used pornographic actors in some of its ads including Lauren Phoenix, Charlotte Stokely, Sasha Grey and Faye Reagan.[57][58][59] Some of the company’s other ads, which feature nudity or sexual themes, have been banned by various advertising authorities. Most recently, American Apparel agreed to comply with a UK ruling to not run an ad that appeared in VICE Magazine because it had the potential to “widely offend” people. In 2005 the company was named “Marketer of the Year” at the first-ever LA Fashion Awards. Women’s Wear Daily published a survey in April 2007 from Outlaw Consulting, a creative research firm tracking the habits of 21- to 27-year-olds, which ranked American Apparel as the 8th most trusted brand, ahead of such clothing brands as H&M and Levi’s. In 2007, Imp Kerr created a fake American Apparel ad campaign in New York. The stunt lasted almost a year, until it was revealed that the fake ads were actually Photoshop mock ups. American Apparel ran a tribute ad on the back cover of Vice magazine.
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Made In The USA. That is American Apparel Legalize L.A. American Apparel has been campaigning for immigration reform for over 11 years. Immigration is an issue that weighs heavy on the hearts of our employees and family members. As citizens of Los Angeles, we know the benefits that all hardworking immigrants bring to this city and its culture and we’ve been fighting to change the system that strips them of rights and dignity. View our site and blog, Legalize LA.net for more information about our stance on Immigration Reform.
Legalize Gay When California voters passed Prop 8 in 2008, we let our GBLT employees know we would support whatever they wanted to do. We believe in freedom, expression and equality, things that are inherently condemned in the prohibition of gay marriage. After printing a few hundred Legalize Gay T-shirts for a rally they attended, the company received thousands of requests from people all over the world who asked for us to expand it. We’ve since given away over 50,000 of these shirts, run protest advertisements and even partnered with HRC for their enormous march on Washington. View our site and blog, LegalizeGay.com for more information about our stance on gay rights.
Branding and Advertising The company is known for its provocative and controversial advertising campaigns, which is largely the inspiration of the company CEO Dov Charney. According to Adage, American Apparel’s advertising ‘telegraphs the brand’ from person to person[48] Their print campaigns are widely considered to be some of the best in the industry.
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Financial Summary Rapidly Growing Global Business
8%
American Apparel operates largest garment factory in the U.S. We are vertically integrated, eliminating the use of sewing subcontractors and offshore labor. Our first retail store opened in 2003, we now have over 260 stores worldwide in 19 countries. Learn more about American Apparel’s global community by navigation through the flags below. American Apparel is a leading basics brand for young adults and people of all ages, with both wholesale and retail divisions globally. The company is known for cutting-edge advertising and product branding. Its “Made in Downtown LA� operations have contributed to significant brand awareness and a cult status worldwide.
18 % 73 %
American Apparel uses a vertically integrated business model which minimizes the use of sub-contractors and offshore labor. Knitting, dyeing, sewing, photography, marketing, distribution, and design all happen in our facilities in Los Angeles. American Apparel is a publicly traded company, having completed a merger with Endeavour Acquisition Corp. on December 12, 2007..
USA Europe Asia
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Financial Summary American Apparel is an Industrial Revolution!
Vertical integration is not only smart for our company, but for our community, our local and regional economy, our environment, and, in turn, our customers. In the past decades, it has become the norm amongst the majority of US apparel companies to move their manufacturing operations abroad to third party vendors. American Apparel has kept it local. We are vertically integrated, and operate the largest apparel manufacturing facility in North America, right in Down town LA. Though it’s not the easy road to travel, this has always been our business model. Why? We believe that having manufacturing under the same roof as design, marketing, accounting, retail and distribution gives us the ability to quickly mobilize all departments, to respond directly to changes in the market, and to have complete visibility over our product - start to finish. An added bonus - this business model is inherently sustainable.
The Vertical Integration Paradigm What does it look like in action? Let’s take our staple product, a T-shirt. The shirt starts as spools of yarn that are knit into rolls of fabric in one of our three knitting facilities in Southern California. These rolls are then dyed, either within the same facility, or in another one of our dye houses, at most 30 miles away. These lots of fabric are then cut, sewn and packed into a box under the same roof at one of our three factories in Southern California. At the same time these garments are being made, our creative department, including photographers, models, and graphic designers, is creating the marketing campaign for our brand with out the help of an outside PR firm or celebrity spokes people. Our shipping and retail departments handle the distribution of these products that we sell ourselves in more
than 280 stores. Not only is this an efficient method for our company, but also for the environment. Vertical integration by definition shrinks a company’s carbon footprint, as the materials are not shipped back and forth internationally. By centralizing our manufacturing operations, we’re not only increasing efficiency, we’re being held accountable and responsible for our actions, because our name is on the side of the building. We do our own knitting, dyeing, cutting and sewing in-house which means we can ensure adherence with US environmental regulations with regards to effluents, waste disposal, airborne particulate matter, and many others. Fashion labels who sub-contract their labor and sewing to dozens of shadowy third-world factories never even need to know the names of the environmental codes intended to keep run-off from polluting local drinking water. Our average factory worker makes $12 to $14 dollars an hour -the highest pay worldwide for the manufacturing of apparel basics, and significantly more than California’s minimum wage. For us, higher pay means heightened efficiency, a better and more consistent quality of work, stronger employee morale, and ultimately, retention rates of skilled operators. For them, higher pay is often a path to the American Dream for their families.
We don’t have to do things this way, we just believe it’s the right way. We employ more than 5,000 people in our LA area manufacturing facilities, making us one of the largest apparel manufacturing employers in the country. This, in a state with unprecedented unemployment and an unprecedented budget deficit. American Apparel keeps Californians, keeps Americans, working, and in doing so contributes millions of dollars annually to the State and country’s tax base, as well as the local economies in which our employees live. Some of these initiatives may fall under the banner of “Sustainability.” Others may be closer to “Corporate Responsibility.”
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100 % Cotton %
100 Cotton
ECO-FRIENDLY & SUSTAINABLE
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R E TA I L P R O D U C T S | 1 7
Retail Products Retail
As of December 31, 2011, the Company’s retail operations were engaged in the countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, Germany, France, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea and China. The Company’s retail operations principally target young adults aged 20 to 32 via the Company’s assortment of fashionable clothing, accessories and in-store experience. Its product offerings include basic apparel and accessories for men and women, as well as apparel for children. Stores average approximately 2,500-3,000 square feet of selling space. The Company competes with The Gap, Urban Outfitters, H&M, Uniqlo and Forever 21.
Wholesale The Company’s wholesale operations sell to over a dozen authorized distributors and approximately 10,000 screen printers and advertising specialty companies. These screen printers and advertising specialty companies decorate its blank product with corporate logos, brands and other images. The Company’s wholesale customers sell imprinted sportswear and accessories to a range of end-consumers, including corporations, sporting venues, concert promoters, athletic leagues and educational institutions. It allow customers to order products by the piece, by the dozen, or in full case quantities. It also fulfil custom and private-label orders. The Company competes with Gildan Active wear, Hanesbrands, Russell Athletic and Fruit of the Loom.American Apparel (NYSE MKT: APP)
is a clothing manufacturer in the United States.[3] It is a vertically integrated clothing manufacturer, wholesaler, and retailer that also performs its own design, advertising, and marketing. It is best known for making basic, solid-color cotton knitwear such as T-shirts and underwear, but in recent years it has expanded—to include leggings, leotards, tank tops, vintage clothing, dresses, pants, denim, nail polish, bedding and accessories for men, women, children, babies, and dogs in various prints and colors.
Production American Apparel bases its manufacturing in a seven-story 800,000-square-foot (74,000 m2) factory in downtown Los Angeles, California where it produces more than 55,000 different products and garments. The company also owns and operates its own fabric dye house, garment dye house, and knitting facility, all based in Los Angeles. American Apparel has decided not to out source its labor, paying factory workers an average of over twelve dollars an hour and often more than $100 a day.Garment workers for similar American companies in China earn approximately 40 cents per hour.It claims to have the ‘highest earning apparel workers in the world’.The factory claims to have the capacity to produce 1 million shirts per week and manufacture 275,000 pieces a day.According to The New York Times it is the largest single garment factory in the United States and employs more than 4,000 people across two buildings. A banner on top of the downtown factory states “American Apparel is an Industrial Revolution.” As of December 2008, banners on top of the factories state “Legalize LA” and “Immigration Reform Now!”
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Retail Products
We have something for everyone whether big or small, kids or adults. You can find our products all over the globe internationally we try to cater to everyone’s needs with our basic, simple but traditional designs. The style that we are trying to reflect represents a diverse audience and so we carry an array of colors and variations to choose from. These are some sample templates to help you get started on choosing what’s the right kind of clothing brand for you.We have a categorized break down of each item that we carry in house. We make all our products custom sized to fit any size of person. Most of our consumers are online and in store based but we can package to anyone 24 hours a day. All you have to do is pick what ever type of clothing item or accessory you would like and we ship next day out. A lot of our products have been featured each year in our reports. In accordance with safety laws, some of our products are required to be CPSC certified. These certificates can be found on our website. The Sustainable Edition is a selection of our most popular styles in 100% USDA certified organic cotton. These products offer the same comfort, quality, and fit as our regular line and are ideal for screen printing, embellishment, and dyeing.
Colors Our wholesale products come in more than 100 colors. Browse our reference samples, with equivalent Pantone Matching System® (PMS) and CMYK values, to find the colors you need. You just have to check our color comparison charts to get the right color values you wish on any type of product. However some we do not carry and only for a selected time.
Fabrics Browse comprehensive information about the composition, weight, imprint ability, and care of all of our fabrics. We carry mostly 100% cotton and organic or sustainable edition type materials as we want to enhance your customer base with the option of preserving and conserving the environment.
Screen Printing & Line Art If you’re looking to screen print on our products, check out which fabrics offer the best results and get tips on working with specialty fabrics. Download line art charts for most of our wholesale styles in .eps or .pdf format is available.
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Sustainable & Organic. That is American Apparel
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Retail Products Retail Brand Advertising
The American Apparel advertising campaign has become as synonymous with our brand name as the signature Made in the USA basics that first put us on the map. Our vertically integrated business model means that every aspect of our operation, from design to distribution, is done in-house. The majority of our creative content is conceived somewhere between the 2nd floor and the factory rooftop, and overseen by our founder and CEO, Dov Charney, who first introduced our un-airbrushed aesthetic more than a decade ago. We find our models all over the world, through online submissions, word of mouth, and in retail stores, where we’ve been known to do an impromptu test shoot or two. Our ads have always been indicative of a time and place in American Apparel’s identity, which has evolved into a 12,000 employee worldwide collaboration. Explore the online ad archives for a closer look at our ads featuring models, factory inner-workings and the global vernacular that inspires us.