REUTERS/Lucy NicholsonPeter Arispe from Mexico works as a quality control checker at the American Apparel factory in downtown Los Angeles.American Apparel is short on cash, and the situation is getting worse.
The company is cutting hours for its Los Angeles factory workers, reports James Covert at The New York Post.
Thousands of workers will see reduced hours - or no hours at all - in the coming weeks, Covert writes.
The reduced labor could mean a shortage of clothing in the retailer's stores.
American Apparel's holiday discounting strategy backfired, leading to a crunch on the company's already-troubled profits.
"The unsuccessful holiday promotion - called a 'dot sale,' which kicked off on Black Friday weekend - not only failed to meet their revenue targets but made the stores look like chaotic discount chains throughout the crucial holiday season," according to Covert.
American Apparel recently parted ways with founder and former CEO Dov Charney.
Charney abruptly lost his job as CEO in June because of "concerns about his trustworthiness," The Wall Street Journal reported at the time. He continued working as a consultant for the company.
But American Apparel investigated Charney and eventually cut ties.
"Based on this investigation, the special committee determined that it would not be appropriate for Mr. Charney to be reinstated as CEO or an officer or employee," the company said in a release. "While under suspension as CEO, Mr. Charney had been serving as a consultant to the Company. This relationship has now been terminated."
Charney told Bloomberg TV that he is down to his last $100,000 and living on a friend's couch.
He says he was betrayed by Standard General, a hedge fund that gave him a loan in July so he could boost his ownership of American Apparel.
Standard General controls his shares as collateral and put several members on American Apparel's board.