New York Post recently released a report, according to which, the American Apparel Inc. (NYSE:APP) will be cutting down the total time that its factories will be open. Market experts are of the view that this step suggests two things. One possibility can be that the company has reduced its working hours because the demand during the holiday season was not very high. The second possibility is that the company is running low on cash right now.

Wall Street is not very optimistic about this company. The stocks of American Apparel Inc. (NYSE:APP) are currently trading on $1.06, the lowest rate in its 52 week range. The stocks of this very same company were trading at $2.40 a couple of years back.

The company has announced its new chief executive: Paula Schneider. The company recently said that it would explore all of its ‘strategic options’ in order to make an informed decision. All of us know what ‘strategic options’ means. According to the market analysts, the company may be looking for a potential buyout. Where the company is facing severe financial problems on the one hand; the former chief executive of the company, Dov Charney, on the other hand, is threatening to drag American Apparel Inc. (NYSE:APP) in a lawsuit for firing him.

Another reason why the company has cut down on its working hours is the fact that this industry is vertically integrated; meaning that the merchandise is produced at a few factories that are located in a particular place and is shipped all across the globe, including stores that are located as far as Asia and South America. The problem here is that the company has to bear high costs in lieu of shipping charges. American Apparel Inc. (NYSE:APP) is happy that its products are in demand in almost all parts of the world, but that does not eliminate the fact that the company has to bear additional costs.

In countries like Bangladesh, a garment worker earns around $600 annually with no benefits whatsoever. However, a garment worker in the American Apparel Inc. earns around $30,000 annually. Moreover, he also enjoys all the healthcare benefits. According to the company, the employees at American Apparel are highly motivated, for they do not have jobs, they have careers.

The company further mentioned that it is a culture in American Apparel Inc. (NYSE:APP) that it recognizes hardworking individuals and rewards them with promotions. The employees at the company are not just faceless workers; rather they actively participate in the decision making process and give the company a direction. According to the management of the company, the strategy that American Apparel employs is known as Sweatshop-Free, a term that it came up with back in 2002.

American Apparel Inc. (NYSE:APP) has around 249 stores worldwide. However, in lieu of its current financial situation, it will have to close some of them down. American Apparel Inc. (NYSE:APP) has a total market capitalization of $187 million with a beta of 2.91. The intraday range for its stocks on December 29, 2014 was recorded to be from $1.00 to $1.11.

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