Exclusive: Can This Woman Save American Apparel?

Photo: Bloomberg/Patrick T. Fallon.
The now-ubiquitous label American Apparel began in 1989 as a one-stop shop for colorful tees guaranteed to be sweatshop-free and made in America. Since then, the brand has grown beyond basics, offering everything from business-casual to clubwear, but the drama surrounding its provocative, often sexist, softcore ads and the sleazy rep of founder and former CEO Dov Charney — who faced multiple sexual harassment lawsuits during his tenure — has frequently usurped the clothing itself.

It's been a long and complicated road to Charney's exit, but his firing was made official in December. Now serving as CEO is Paula Schneider, a whip-smart businesswoman who, with her first official act of completely revamping the company's ethics code, has already shown she means to improve AA's work environment, and get it back to the business of being a beloved clothing brand.

Just six weeks into her tenure, Schneider recently phoned in from her L.A. office to tell us her agenda for putting American Apparel back on the top of your shopping list. After hearing her plans, we have faith that she'll get it done.
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You began as American Apparel’s CEO about six weeks ago. How did you prioritize which changes to implement first?
"We’re drinking from a firehose here, because there is so much information and so many people, and just so many things to understand when you work here. I’m in love with the brand, and I just want to say that the brand itself is extremely strong. There is some tweaking that we need to do with some processes and procedures, just like there is with any company, but there’s a young, creative group of people who work here. It’s just a matter of deciding the best properties and procedures to focus on down the road."

What was the most pressing change you needed to make? 
"For me, there was an opportunity to improve in planning and forecasting, which is the question of: What are we going to make and when do we want it delivered in the stores? I think there’s also an opportunity of capturing more of the psychographics of the millennial customer — someone whose age ranges from 15 to 35, let’s say. If we look at what we’re going to sell for a 15-year-old boy or a 35-year-old woman, these two customers are very different. We have the younger set well covered, but I think there’s an opportunity to add to our assortment to make sure that we’re covering the 25- to 35-year-olds."

How do you plan to cater to that end of the spectrum?
"Well, we have a lot of different clientele that comes into our store. If you want clubwear, we’ve got it. If you want super-casual sweatshirts, we’ve got that. If you want something you might wear to work or on the weekends that is in between those, I think there is an opportunity to provide more. We’re debuting things that are a bit flowier, along with some really great knits that are lightweight layering pieces. We have a lot of form-fitting pieces, lots of tops, but I feel like, especially for women, we can add to that assortment. We’ll always be casual, but it’s just widening our variety a bit more to catch more of the millennial set."

These days, there’s less of a delineation between workwear and weekend wear.
"Yes, millennials are multidimensional. They’re really only interested in buying things that serve more than one function."

How can you create a workplace that fosters creative freedom, but also maintains clear boundaries and ethics? 
"I’m involved in putting together a strategic plan that encompasses the entire company: designers, retail, tech, marketing, everything. In the plan, I ask the employees about their roles and where they see the company going. Then, they’re involved in the process, and it makes it easier for me because I’m so new. After being here for six weeks, I can’t find every missed opportunity or weak spot — but they can, because they’ve been here longer. We have this live, working document that everyone can contribute to so everyone can be heard. It’s not a top-down process, but it’s a bottom-up process."

Photo: Courtesy American Apparel.
How would you describe the current brand culture?
"It has an extremely strong culture and an extremely strong DNA, and that’s the brand. We have to do everything we can do to maintain the American Apparel brand. It’s the brand that’s relevant."

What would you say to someone who wants to work at American Apparel?
"It’s the most creative place you will ever work; it’s sort of like the Wild West. It’s interesting, because different people can give their opinions and there’s so much opportunity to be involved. Also, the beauty of having our own in-house manufacturing is an incredible asset. If we put something out there that we think is great and we see that it’s a hit in stores, then we can turn around and make more of it and be back out in the stores by the next weekend. We can be quicker than anyone, and nobody has this opportunity but us."

How do you plan to maintain American Apparel’s provocative image, while still upholding this new standard?
"This brand is edgy and it will always be edgy. It will continue to be provocative in terms of social commentary. If you stand in front of our stores and walk by, every single person has a comment and opinion on the brand. We’re more than about the clothes; we’re the largest manufacturer of apparel in North America. It’s the most important brand in North America. And, if you look at our consumer base, you want to do something that’s good. It’s a call to action. This is a company that’s about gay rights and anti-bullying, immigration reform. There are so many things that we stand for, and we continuously push the envelope in that fashion. Just because the CEO changes doesn’t mean the brand changes. The brand is the brand."

How do you define success for American Apparel? 
"First, there’s the shareholder value, because it’s a public company. Our intent is to add value for both the shareholders and the stakeholders. But also, it’s to maintain the DNA of the brand and grow the brand, because there’s tremendous potential."

What specific changes can American Apparel customers expect within the next year?
"It’s really interesting because there’s a lot of logo fatigue out there. American Apparel is built upon advanced basics in fashion; you know if you go in there you’re going to find your hoodie, or your black skirt. There are these iconic pieces that we will always carry. And in fact, about 50% of our inventory is on replenishment. The other 50% will have a broader assortment that we’re introducing for fall."

You could argue that American Apparel was one of the earliest purveyors of normcore, and now so many more companies are getting involved. How do you stay competitive? "People are going back to basics. With our business model, we have a basic business that goes day in and day out, and still remains an edgy brand."

What’s the best piece of advice you’ve received in your career?
"I worked for BCBG for many years, and there I learned something that’s stuck with me: If you don’t ask if you can do it, and you just do it, then you’ll never know that you can’t. It’s about having the forethought about being able to say, 'I’m going to do this, and I’m going to make this work.' If you think about American Apparel, nobody had ever done this before. The fact that we have 7,500 employees in our facilities in Los Angeles, nobody could replicate this because today the barriers of entry are just too high.

"If you go back and you think about it, in the ‘90s, there were people who were manufacturing in the U.S. But, when fast fashion came on the scene, people realized that they could make it cheaper offshore. Once the consumers began to get exposed to fast fashion, they want more and they want it faster, but that’s just not possible when it’s made offshore. So, those companies who brought their brands offshore are now trying to come back to the U.S. for manufacturing, and it’s very challenging to set up. We already have the model in place, so we’re set up at a great point for success."

What inspires these particular changes that you’re making to American Apparel? Are you looking to any other companies as an example of how to change this one?
"No, because we are charging our own path. If you take both the design and the processes and procedures and come up with a plan that’s inclusive and creative, there are endless possibilities. No one has ever done what we’re doing, so there’s no comparison. If you tried to find another brand that has the business model that American Apparel does, you’d be hard-pressed to do so."