American Apparel Inc. (Los Angeles), the edgy specialty apparel retailer with the cult-like following, will be sold to Endeavor Acquisition Corp. (New York) for $382.5 million.
Endeavor Acquisition is a small, publicly traded investment group created last year with less than $125 million in assets. American Apparel is the firm’s first acquisition. It was founded as a “blank check” firm, intended to buy companies, by Jonathan Ledecky, who started U.S. Office Products in 1994. That company filed for bankruptcy protection in 2001, a few of years after Ledecky left.
American Apparel founder Dov Charney is expected to remain ceo after the sale.
American Apparel, founded in 1997, now has 145 stores in 11 countries. But its business has slowed significantly in the last year. Same-store sales rose 7 percent in 2006, compared with 74 percent in 2004 and 45 percent in 2005, according to documents prepared by Endeavor.
Still, Endeavor predicted that American Apparel could reach 800 stores worldwide. “I think we will get beyond that” number, Charney said in an interview. “It’s all about manifest destiny. Wherever FedEx goes, we will go.”
Ledecky said he became interested in American Apparel after several young analysts at his firm, which has a casual dress code, started showing up to work wearing the retailer’s signature T-shirts and polos.
“This is an exciting time for American Apparel – acquiring the necessary financial foundation will give us the opportunity to realize our bigger dreams,” said Charney. “By leveraging art, technology and design, we will continue to bring people clothes they love to wear. This transaction and the infusion of substantial capital from Endeavor will allow American Apparel to capitalize on the many opportunities in front of us ranging from improving our manufacturing processes to implementing our global growth plans.”