RFID Talk Blog

American Apparel: RFID plays key role in financial turnaround

American Apparel is bullish on RFID. In its earnings report released last week, the troubled retailer identifies RFID as a major key to its turnaround plan.

American Apparel, a vertically integrated manufacturer, distributor, and retailer of branded fashion-basic apparel, announced financial results for its second quarter ended June 30, 2012 on Aug. 14.

RFID-enabled stores like this one have been key to American Apparel's financial turnaround.

“Though the first two quarters are historically our slowest, significant sales growth allowed us to more than double our EBITDA performance to $7.6 million in the second quarter of 2012 from $3.7 million in the second quarter of 2011,” said Dov Charney, Chairman and CEO of American Apparel. “In the second quarter we saw over 30 percent of our stores with sales growth in excess of 20 percent and as we continue to scale our operations and further implement store-level improvements, we believe we can raise the overall sales performance even further.”

Here is an excerpt from the company’s earnings report:

Some of the more significant tactics the Company is employing to improve sales and profitability include:

Implementation of tighter inventory management systems through the RFID program. Approximately half of the stores are still to have RFID implemented.

That means that American Apparel, which operates 251 stores around the globe, has about 125 more stores to equip with RFID technology. American Apparel’s RFID-enabled stores operate at a 99.8 percent inventory accuracy rate, almost unheard of for an apparel chain with such varied SKUs. That could easily contribute to the double-digit sales gains that Charney refers to.

This April, the chain announced that RFID had an unexpected side effect. By attaching UHF tags to about one million pieces of apparel a month, American Apparel has reduced shrink by an average of 55 percent. Some locations curtailed theft by as much as 75 percent.

 

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