American Apparel isn't going bankrupt, doing really well for sales actually. Paula Schneider, the new CEO, wants to change things up a bit. She isn't a fan of how AA was basically a way for any idea, no matter how good, to get put into mass production. She is doing the steep sale to clear out the shelves and whittle down the catalog. She wants it to become a lot more mature, appeal to more and older women (and hopefully men- no word on that yet (ie if she has a target demographic for new men's clothing)).
She's doesn't want AA to be "quirky stuff that reminds you of the 80s and 90s and basics in 10,000 colors". From what I've heard, she's "cutting the fat" in almost every regard- employees that aren't up to snuff, stock she doesn't want, discontinuing lots of styles, etc. I can see the stock numbers for the warehouse (but not retail stores) and the discontinued/on sale ones aren't all just the low-stock ones. Judging by some numbers, she's discounting/discontinuing some things even though they just restocked (she did start in the middle of everything, it seems). So things you've seen at AA for years won't necessarily be around for much longer.
Have a look at the new section for women:
http://store.americanapparel.net/new_cat33159instead of one pretty basic piece in a ton of colors, it looks like there is a lot more focus on using the material and cut of the fabric to do the talking, which is honestly what I've wanted them to do since Dov left. Nice clean tunic, quality combed cotton in a jersey knit, boom done. Not 5 flower prints and 20 colors.