By Nivedita Bhattacharjee

American Apparel Inc, that hip clothier to urban youngsters which proudly advertises its “made in downtown LA” and “sweatshop free” policies, decided to dismiss about 1,500 of its factory workers last week as they could not submit proper immigration papers.
 
The Los Angeles-based company ran into trouble in June, when a federal probe found that about a third of its workers had supplied suspect or invalid records and were not authorized to work in the United States.  Then, last week, the company “let go” about 1,500 of them.
 
Though CEO Dov Charney, a Canadian immigrant, promises the dismissed workers “priority treatment, in terms of being interviewed for future positions with the company,” once the workers get their papers in order, and also said he’s disappointed by President Obama’s administration for having failed to bring up immigration reforms, some industry experts think there’s more to the mass dismissals than meets the eye.
 
“I want to give them the benefit of doubt and say, yes, those people don’t have the papers so they have to cut down on the jobs, but it’s almost too coincidental in my eyes to sit there and say, okay, all the growth of the new stores are cut, the inventory is up, and why is this happening this minute?” said Marshal Cohen, chief industry analyst at market research firm NPD Group.
 
In August, the company cut its sales forecast, and said it might also post a full-year loss.
 
“It’s all about speed-to-market for American Apparel, it’s about trying to get the products into the stores as fast as possible,” NPD’s Cohen said. He added that with so many workers out there would be a change in dynamics for the company, but he said production should not be hampered much, as the company needs to cut back on that anyway, as sales slow down.
 
“This is one unusual retailer, in that they are so tied to production to sales. So, the minute sales start to feel the pain, they got to instantly turn the faucet off, else they’ll flood the sink!”
 
American Apparel did not respond to an email asking for their take on Cohen’s view.

Last week, Charney wrote a farewell letter to employees and posted it on his site in English and Spanish.

(Reuters photo)

Check Out retail strategy for growth.

A list of the top 10 companies from a “Hot 100 Retailers list” compiled by Planet Retail for the National Retail Federation showed that while a few companies grew organically, most grew as a result of a merger or acquisition.

Topping the list of companies that grew through a deal was DineEquity,  which bought Applebee’s last year. 

Others in that category include Susser Holdings after its purchase of Town & Country Food Stores and Village Market grocery stores, as well as the combination of fast food chains Wendy’s and Arby’s into Wendy’s/Arby’s.

Of the companies that grew on their own, Los Angeles-based American Apparel was “tops,” with revenue growth of 57.6 percent, the list showed.

Another not-so-surprising name in the top 10 was Apple, known for its iPod, Mac computer and one of the latest favorites in the market — the iPhone. “Still opening new locations, Apple also uses its stores as a way to build brand awareness,” according to the survey.

Some retailers actually managed to maintain growth, averaging a 10.8 percent compound annual growth rate, the list showed.  Those on the growth chart include GameStop, Urban Outfitters, Best Buy and J. Crew to name a few.

The Hot 100 Retailers study is the annual ranking of the fastest-growing publicly traded retail chains, and rankings are decided by increases in year-over-year revenues between 2007 and 2008.

Here’s the list of the top 10 companies in the Hot 100 Retailers List:

1.       DineEquity

2.       American Apparel

3.       Susser Holdings

4.       A&P

5.       Apple Stores/iTunes

6.       Wendy’s/Arby’s Group

7.       O’Reilly Automotive

8.       Finlay Enterprises

9.       The Pantry

10.     Amazon.com

Also in the basket:

Molson Coors profit jumps more than expected

Tyson profit led by chicken, shares higher

Equities too hot for their own good?

(Photo/Reuters)

Check out the Lion’s share of American Apparel.
 
OK, so it’s not getting majority ownership.  Still, American Apparel, known for bright tees and sultry advertising, said Lion Capital LLP invested $80 million.
 
“In light of unprecedented market conditions, we believe Lion Capital’s investment serves as a strong endorsement of our company and the tremendous potential of our brand,” said American Apparel founder and CEO Dov Charney.

American Apparel shares, which trade on the AMEX, shot up almost 33 percent to $1.98 in morning trading.
 
Lion Capital, based in London, gets to bring two people onto the board.  It also gets warrants for shares, that if converted into common stock, would give the firm about an 18 percent stake in the clothing retailer.

Lion Capital previously invested in brands such as Jimmy Choo.

Also in the basket:

Goldman Sachs removes Wal-Mart from conviction buy list

Sara Lee Weighs Sale of European Business (WSJ)

Estee Lauder’s Dan Brestle to Retire (WWD, subscription required)

Online fashion battle to heat up as sales boom

(Reuters photo)

(Due to a tabulation error in the research, STORES Magazine has issued a corrected list. This is being corrected to remove Coldwater Creek from the Top 10 list and replace it with Citi Trends at No. 10) 

Though the retail industry cooled last year to its slowest growth since 2002, a number of retail companies experienced fiery growth, according to the National Retail Federation. The hottest retailers, in general, grew through acquisitions, according to the trade group’s STORES Magazine.

NRF’s 2008 Hot 100 Retailers list, which will be included in STORES’ August issue, ranks the nation’s fastest-growing retailers that are publicly traded and have more than $100 million in annual sales.

Topping the list this year is CVS Caremark, which grew 2007 revenue by 74 percent because of its acquisition of Caremark. The No. 2 spot also went to a drugstore chain — Rite Aid, which purchased Brooks Pharmacy units in New England and Eckerd on the East Coast, saw revenue grow narly 40 percent. IHOP, which recently changed its name to DineEquity Inc, was No. 3 with last year’s purchase of Applebee’s.

WalMart, the world’s largest retailer, clocked in at No. 80, with 8.6 percent growth. Its mass market rival Target Corp, brought up the rear at No. 100, with 6.5 percent revenue growth.

Here is a list of the top 10 retailers, according to STORES Magazine: 

          1. CVS Caremark

          2. Rite Aid

          3. IHOP

          4. Amazon.com

          5. American Apparel

          6. GameStop

          7. BJ’s Restaurants

          8. Chipotle Mexican Grill

          9. FTD

          10. Citi Trends

     (Photo: Reuters)