Made in America fails to work for American Apparel, now filing bankruptcy

Teenage clothing retailer American Apparel, that posted $19.4 million loss for second quarter, its 10th such consecutive loss has now filed for US chapter 11 bankruptcy protection and said it had reached restructuring support agreement from 95% of the lenders.

Though the company is a specific case having trouble with former CEO and founder Dov Charney's sexual misconduct, there are key extracts which can be said about US economy and industries as a whole.

• This year so far close to 50 corporations have now filed for bankruptcy in US and more than 80 globally, which marks 2015 as one of the toughest year for corporates since 2009. Recent rise in high yield spread in US and Europe suggests that investors are warming up to the risks of corporates after years of cheap credit. In absence of growth and emerging market turmoil, it could turn out to be worse.
   
• American Apparel came to prominence with their signature hot pants and made In America policy. It can be undoubtedly said with stronger Dollar, it is now extremely tough for domestics to make in US and sell in US, without losing market share or sharp decline in margins.

Recent slowdown in job growth is likely to prompt policymakers at FED to reconsider their stance and impact of strong Dollar.