American Apparel Puts Made-in-the-USA Advocates to the Test

(Bloomberg) -- Imagine ordering a T-shirt online and being able to click one of two options: made in the USA or produced overseas.

But there's a catch. If you pick the U.S.-produced version, it will cost you as much as 25 percent more.

That scenario may soon be a reality on the website of American Apparel, which was acquired by Gildan Activewear Inc. earlier this year. The newly merged company is trying to stay true to American Apparel's domestic-manufacturing roots -- a longtime selling point for the apparel retailer -- while still offering the lower-cost wares that Gildan makes in other countries.

“There are consumers that really want ‘made in USA,' so we're going to cater to those consumers,” Gildan Chief Executive Officer Glenn Chamandy told reporters on Thursday. “But there are consumers that didn't want to pay the actual price but they love the brand, so now they can also buy the brand.”

Gildan, based in Montreal, purchased American Apparel for $88 million in a bankruptcy auction this year. But the company didn't acquire the chain's retail stores, which have been closing. Instead, it aims to use the American Apparel brand to sell more T-shirts and other clothing via wholesalers and e-commerce.

A new American Apparel website will open at the beginning of the third quarter, and it should offer the U.S.-versus-overseas options, according to Chamandy. Eventually, American Apparel gear could reappear in brick-and-mortar stores, though the company hasn't made a decision on that yet, he said.

Under the new management team, which kept a small group of people in Los Angeles to work on marketing and advertising, the brand's image “won't be sexual like it was,” Chamandy said. The focus is on millennials and fashion, he said.

Gildan has built a global production chain ranging from yarn-spinning to clothes-stitching, which has enabled the company to compete with Hanesbrands Inc. and Berkshire Hathaway Inc.'s Fruit of the Loom. American Apparel helps the company expand in the more lucrative fashion end of the wholesaling business, and the brand was among acquisitions that helped Gildan's profit top analysts' estimates last quarter.

The company, which employs 48,000 people throughout the world, has done dual pricing before with its lesser-known brands, according to Chamandy. American Apparel will have operations in the U.S. “forever” because there will always be demand for it, he said. Outside of the U.S., people don't care that much.

“In those markets, made-in-the-USA is not really the driving force, it's actually the brand that drives the sell,” he said. “The brand is very strong.”

To contact the reporter on this story: Sandrine Rastello in Montreal at srastello@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum