American Apparel Reports a Rare Uptick In Sales, Thanks to Online and Wholesale

We’re still not seeing American Apparel as the next Apple or Amazon, but the company reported (on time!) a rare bit of good news: sales in the 3rd quarter were up 5%.

But don’t get the idea that somehow AA is becoming trendy again (or even sexy, as this weird new shoe ad suggests). It’s not.

The company is clawing its way back from the brink of bankruptcy largely thanks to its ultra-boring wholesale and internet business, which no one except Charney’s many creditors care about. {BusinessInsider}

While the fact that US retail sales continue to dip lower, losing 1.4%, we’d have to disagree on the wholesale and internet businesses being boring. Especially the internet!

In the UK, brick and mortar retailers who invested in e-commerce were able to weather the continued economic store better than their counterparts who were largely or solely dependent on brick and mortar stores. Burberry has invested heavily in social media, online marketing and key markets, and they now have stellar results and more earnings for shareholders to show for it.

So while internet – which was up 13% to $13 million in sales – may only be slightly more than ¼th of American Apparel’s $43 million in retail sales, there are no underlying real estate problems with leases signed at the wrong time, dead malls or dead markets to worry about either.

Instead of looking to Steve Jobs for inspiration, Dov Charney would do well to look to Burberry CEO Angela Ahrendts for inspiration on reviving a brand that people have written off. Heavily investing in the internet business is a pretty good place to start, and the recent expansion of American Apparel’s beauty products is a good move too.

As for wholesale, it brought in $36.7 million in sales – only $5 million short of what company stores accounted for. Wholesale usually means larger bulk orders, and even incremental improvements in logistics or manufacturing can have a positive impact.

Charney still has a challenge on his hands for turning around the retail business, but improving 2 out of 3 aspects of the company’s key businesses isn’t the worst thing the company could have reported.

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