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American Apparel to Everyone: "We're Not Dead Yet, We've Got a Plan!"

Bad boy CEO Dov Charney's name may be mud, but the rest of American Apparel's (APP) management team has a plan to turn the ship around. Their secret sauce? Wholesaling and staff. Marty Staff, that is. The former CEO of JA Apparel (think Joseph Abboud) and Hugo Boss will be AA's chief business development officer. He'll helm the push to execute Charney's mandate to "leverage existing assets and systems that we have."

Between Staff and other new executives, the scheme may just work. Indeed, last February AA brought in a new CFO, John Luttrell, from Old Navy (GPS) and Wet Seal. And in October I reported that Blockbuster's (BBI) finance chief Tom Casey took the president's chair.

Staff's certainly got cred. Like AA, JA Apparel is one of the few remaining clothiers to design and manufacture exclusively in America, something Staff used to great advantage when he helmed the deal to dress the NY Giants (off the field of course) as well as NFL coaches.

Now that he's in AA's development chair, he can certainly flog AA's commitment to its vertically integrated business model which minimizes the use of sub-contractors and offshore labor to connections that care about buying all-American. Right now, American Apparel's only wholesaling to the imprintable t-shirts.

There are other glimmers of possibility. American Apparel continues to soldier on despite a stock price that's plummeted so low, it's a hair's breadth away from delisting on the NYSE - Amex exchange. Even though revenues fell to a Q3 loss of $9.5 million in November, across the pond in Paris' Galeries Lafayette and London's Selfridges, two store-within-stores have been performing well. "I think the American Apparel name is better than the business. This is a hot brand with a lot of legs, and it can move in every direction," Staff told WWD.

Charney's convinced that Staff could lead a charge to realize a 10 percent increase top-line sales at AA branded stores. That would translate to over $20 million in EBITDA which would be a huge help American Apparel's ability to refinance its $76 million loan with Lion Capital at more favorable terms when it's time to pay up.

Could European and Asian expansion be the ticket to profits? Staff counts a stint at Ralph Lauren (RL) on his CV as well. Lauren's a shining example of selling the American lifestyle overseas. Levi's has leveraged its apple pie image to great effect in China, too. And it certainly wouldn't hurt to peddle threads in places where Charney's reputation isn't the first thing potential customers think of when they see the brand.

That said, it hardly seems to faze Staff that he's working for a guy who's made a career out of bad business practices, sexual exploitation, and general shenanigans. Staff told MRKetplace, "Having worked with people like Ralph Lauren and Calvin Klein for close to 20 years, I prefer to work with creative people, and Dov really got my passion for this business to further heighten."
Which proves yet again that Charney's preposterous plays only serve to light up the blogosphere, but not a fire under executives' butts. Whether they tire of his antics and show him the door or not, having a solid executive team in place means things for American Apparel are looking up. But I wouldn't be surprised if their fingers are crossed under the conference room table that the balance sheet doesn't take that long to catch up.

Image via American Appparel

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