American Apparel investigated for immigration violations

Posted Jul 1st 2009 5:30PM by Zac Bissonnette
Filed under: Bad News

BloggingStocks is a family site, so I will simply note the Reuters headline for this story: Probe fingers 1,800 American Apparel (AMEX: APP) workers.

Now that you have had a moment to make your own joke, we continue with the news -- although I will say that when I saw this headline, I thought that CEO Dov Charney was back to his old tricks.

Anyway, a United States federal probe found that about one-third of the company's LA-area factory workers were not authorized to work in the United States.

In an SEC filing, the company disclosed -- somewhat stunningly -- that "The company believes that its current surplus levels of inventory and manufacturing capacity would mitigate the adverse impact of any disruption to its manufacturing activities that may potentially result from the loss of these employees."

In other words: We have way too much inventory as it is, so this isn't a big deal. Investors sent the stock down nearly 10% on the news, and American Apparel appears to be in a classic Catch 22: If the potential loss of one-third of its employees won't have a materially adverse effect on its operations, the company's operations are in pretty bad shape.

Tags: American Apparel, AmericanApparel, APP, illegal immigration, IllegalImmigration

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Reader Comments (Page 1 of 1)

7-28-2009 @ 10:27PM

JoStrick8 said...

Ugly Americans can lose their job; but cute "illegal" immigrants get rewarded for breaking the law! Sounds un-American to me. DISCRIMINATION ! Hope company gets sued to H-LL & back; maybe American stockholders will wake up and stop chasing the allmighty dollar, peso, rube or whatever currency they love to spend at the company they invested in; Oh--how many of their products are produced here in this country ???

9-04-2009 @ 6:57PM

greydaisy625 said...

The laws do not make sense. You cannot ask to see the documents until you hire someone and you cannot fire them once you see the documents and know that they are fake. You have to submit them to an agency for them to deny them, then give them a chance to correct the problem ( about 8 working days). by then, they pull their back and get you for the workers comp! I am all for reform because something has to be done.