7.

American Apparel OrganicTM expects to make profits of $5.6 million in the coming year. On a preliminary basis, in the year ended December 31, 2012, total net sales were $60.5 million, a decrease of 6% over the prior year. For the year ended December 31, 2013, total net sales increased 3% to $633.9 million, with a 3% increase in comparable sales and a 4% increase in wholesale net sales1. For 2014, American Apparel projects net sales of between $634 million and $658 million. The low end of that range would represent flat sales, while the top end would lead to a 4% increase2.

First year cash flows are expected to be positive due to strong customer base and expected feedback from pro-green stockholders. We expect 2014 to be a year where we return our full focus to exploiting the strength of our brand and delivering exceptional service to our retail and wholesale customers2. Advertising expenses are expected to be $42,700 a month and once the new project is launched expenses will consist of supply distribution, marketing and administrative operating costs.

7. Implementation PlanThe American Apparel Organic line will implement existing strategies used with current products simultaneously incorporating new forms which reach a diverse group of people who gear towards organic, earth friendly products. Brand awareness will be strengthened through personalized customer communication and a strong online presence.

Our aim is to gain 80% of the market with the Organic line plus already existing products and services through eclectic positioning, strengthened customer relations and extensive brand awareness.

7.1 Pricing Strategy Pricing will be based upon a six-month trial basis and also varying amongst different target segments. The first six months would involve low priced strategies such as BOGO sales and package deals.

7.2 Sales Strategy Innovative software such as new POS Software will be used throughout store

with each transaction to fill databases with costumer information to increase satisfaction amongst most frequent shoppers.

Informal posters/ diagrams will be used througouht stores to bring awareness to costumers about the benefits of organic clothing while underling the American Apparel corporate social responsibility mission.

1 Investors.americanapparel.com

2 http://www.asipublications.com/Counselor/News/

7.3 Competitive Edge Frequent Shopper points once accumulated to a certain will award

customer with discounted pricing. Plus sized and petite clothing sizes will be offered with onsite altering

assistance. Increased locations for ease of access for consumers.

7.4 Marketing Strategy Marketing costs will not exceed 15% of overall revenue Promotions will involve comparisons of organic clothing versus man

made material while still favoring other American Apparel products.

7.5 Financial Forecast The financial model below describes first year monthly sales that are expected to be moderately positive. American Apparel customers through surveys have been found to be more inclined towards organic, healthier lifestyles and therefore their responses to the new line will balance out cost with profit. Sales are expected to peak during maturity (approximately mid-year) while the first few months paves the way for the first set of interests.

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

8. Control Plan

The American Apparel Organic Devision will be held to very high standards and will continue to uphold the mission of American Apparel throughout the world.

Setting Performance Standards

Pieces which are part of the Organic line that perform 50% less than other items offered will be eliminated from the line. Customer service expectations will be exceeded and upheld while communication and connectivity with consumers both wholesale and retail will be strengthened.

Monthly and Quarterly Checks

As already practiced across the American Apparel organization, monthly and quarterly checks will be performed to ensure data precision and to asses productivity and efficiency.

Measuring Consumer Standards

Even though sales might be low in the first few months, consumer awareness and positive feedback is essential in ensuring strong foundational elements for the clothing line.

Control Phase Timing

By implementing timelines for expected milestones, the company will be able to organize strategic measures that may involve increased marketing or adjustments through financial analysis.