Amazon linked with American Apparel deal
Amazon, as is so often commented on, have gone from an online marketplace into a multi-market and tremendously broad behemoth. They have even began producing brick and mortar stores and are dipping their toes into logistics. Well, now they are being linked with a takeover of a well-known clothing company that has fallen on hard times.
You never know what’s going to come next from the American technology firm. They are always likely to surprise the public with something new on their Prime service, or a flying drone, or maybe a physical shop where you just walk out with the goods?
Well, they are now being linked in widespread reports from financial publications to a move to take over American Apparel, the bankrupt American clothing business.
Los Angeles based American Apparel is up for sale after falling into bankruptcy for a second time in the last two years. And, Business Insider have reported that Amazon, along with Forever 21, are one of the firms looking at picking up the business.
As you would imagine for a company as patriotic in their branding as American Apparel, their workers and manufacturing is done in America, with the high production costs that are associated with this. And, keeping these jobs in America is an extremely topical news area at the moment, with President-elect Donald Trump focusing on this issue, amongst others, in much of his campaign rhetoric.
Writing in Business Insider, Eugene Kim has reported on how one major positive for Amazon if they buy American Apparel would be that it would be seen as a soothing gesture towards reconciling with President-elect Trump, who bashed them in many of his campaign speeches.
Kim said: ‘by acquiring American Apparel, Amazon could save thousands of US manufacturing jobs and win Trump's support. With the starting price to buy part of American Apparel currently at $66 million, according to Reuters, Amazon could score a big win by spending a relative pittance (Amazon had roughly $12 billion in cash on its balance sheet at the end of the most recent quarter).’
There could be a whole multitude of other motivators behind Amazon wanting to pick up American Apparel, but it is certainly a curious move, considering that the apparel business is clearly failing and it also has millions of dollars of debt.
Dominion holds Amazon in its Global Trends Ecommerce Fund.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.