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American Apparel Buys OAK NYC: Why That's a Good Thing

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Left, how <a href="http://www.oaknyc.com/oak-apron-short-black-womens.html">Oak</a> does shortalls; Right, how <a href="http://store.americanapparel.net/product/?productId=rsa1304">American Apparel</a> does shortalls.
Left, how Oak does shortalls; Right, how American Apparel does shortalls.

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This morning in Mindblowing Acquisitions, American Apparel—legendary for their provocative ads, womanizing owner, and financial trouble—has scooped up Indie 38 member Oak. While the purchase is completely confusing at first glance, diving deeper into both retailers' businesses does reveal some interesting benefits on both side of the fence. After the jump, we've broken down why this is good for both Oak and American Apparel.

Why this is good for Oak
· Oak's total sales were around $5 million—Dov Charney, AA's infamous chairman and CEO, feels confident that they can "grow it to a multiple of that."
· The Greenpoint and Bond Street stores will benefit from AA's existing technology, including point-of-sale systems and RFID
· Access to AA's logical infrastructure, including freight and distribution, will make e-commerce sales smoother
· Oak's wholesale line—which currently holds about a dozen accounts including Net-a-Porter and Saks Fifth Avenue—will have the opportunity to expand with access to AA's massive Los Angeles factory
· Domestic store expansion is on the horizon: a Los Angeles store is eminent
· International store expansion is also probable: an empty, mutli-level store in Seoul—once an American Apparel—could be turned into an Oak store within the next six months
· Oak will operate its own leg of the company, with the founders still steering the ship

Why this is good for American Apparel
· It was cheap: "a small enough transaction that the company did not have to file a notice with the Securities and Exchange Commission."
· It makes AA look more financially stable
· Oak's aesthetic and price point make it noncompetitive with AA
· Oak's founders will consult on AA product
· American Apparel Purchases N.Y. Specialty Retailer Oak [WWD]
· All Oak coverage [Racked NY]

Oak Clothing

28 Bond Street, New York, NY 10012 212-677-1293 Visit Website