It is rumored that Jeff Bezos' Amazon is one of the companies in the running to acquire troubled, bankrupt American Apparel.
Yes Amazon. Purveyor of books, DVDs, electronics, and lately, fashion. The Los Angeles based sportswear company could be a big boost to Amazon's growing fashion business.
Acquiring American Apparel could also solve another big problem Amazon has been facing–serious tension with President-elect Donald Trump.
During his campaign, Trump frequently criticized Bezos and accused him of buying the Washington Post to keep Amazon's taxes low and avoid antitrust allegations. Trump said during one campaign event, "If I become president, oh, do they have problems."
Bezos didn't take that threat lying down. He said that Trump is "eroding our democracy." Bezos suggested that Trump take a trip to space instead. Of course, Bezos is also the owner of the space exploration company Blue Origin.
Trump pledged to keep manufacturing jobs in the U.S. as part of his platform. Of course, American Apparel is best known for its "Made in the USA" tag line and is the largest clothing manufacturer in North America with 4,500 employees.
If Amazon buys American Apparel, it could save thousands of U.S. manufacturing jobs. As a result, Trump would surely have to acknowledge this as a win and give Amazon his support.
American Apparel's starting price is $66 million. That is a relative drop in the bucket for Amazon, which finished the most recent quarter with $12 billon in cash on its balance sheet.
It is not known if Amazon would also acquire American Apparel's Los Angeles-based manufacturing facilities.
The only official bid on American Apparel is from Canadian clothing brand Gildan. That offer is just for the rights to the brand. It doesn't include the company's 110 retail locations or its inventory. The bid has an option to acquire the inventory and the manufacturing facilities.
Amazon has been on a growth spurt lately. The company has been throwing money behind logistics, grocery delivery, and a number of other new offerings. It is unknown whether acquiring American Apparel's substantial losses and real estate is really something the Seattle-based e-commerce giant wants to do.
However, one of the areas that Amazon has recently expanded into is actual brick-and-mortar bookstores. If Amazon can pull off the acquisition, the company gets an expanded real estate portfolio in which it can sell its product. Over the past year, Amazon has been slowly rolling out private-label clothing brands. Having American Apparel's stores would provide a place for customers to try on the clothes before they purchase them. Amazon could also promote Prime this way by making the clothing stores accessible to Prime customers only, which is what they are doing with their bookstores.
Amazon is expected to pass Macy's as the top clothing retailer in the U.S. in 2017. The acquisition of American Apparel could make that happen sooner.