Teen apparel retailer American Apparel (APP) is laying off hundreds of workers as it overhauls its production process, which could include outsourcing part of its production to another U.S. manufacturer, the Los Angeles Times reported on Tuesday.
“If we do decide to produce some pieces out-of-house, they will still be American-made,” Chief Executive Paula Schneider wrote in a letter obtained by the Times.
Schneider said a mismatch between workers and manufacturing was an inefficiency that needed to be addressed as part of the company’s turnaround efforts, the Times reported, adding the move came after “months of careful and rigorous review.”
The retailer will also cut down on the number of garments it makes throughout the year, to clear inventory.
As part of the layoffs, which started last week, about 500 employees have lost their jobs, the newspaper said.
An American Apparel spokeswoman declined to comment to Reuters.
The fashion chain, known for its “Made in the U.S.A.” fashion, filed for bankruptcy in October following years of losses and expects to be profitable in 2018. Earlier this year it fought off attempts by founder and former CEO Dov Charney to buy the company back. American Apparel had fired Charney as CEO in December 2014, six months after suspending him for alleged misconduct, which Charney denied.
