Los Angeles, United States — American Apparel, the US teen clothing retailer known for its sexually suggestive advertising, has hired investment bank Houlihan Lokey Inc to explore a sale, people familiar with the matter said on Wednesday.

The sale process comes just six months after American Apparel emerged from Chapter 11 bankruptcy, following the public ouster of its controversial founder and chief executive officer, Dov Charney, and a string of losses that the company has struggled to reverse.

The sources asked not to be identified because the sale process is confidential.

"As we have regularly communicated to employees, vendors and customers, we continuously evaluate strategic alternatives," American Apparel, which is now owned by its former creditors, said in a statement.

When contacted for comment, Charney said he would have to see what the asking price for his old company is before considering making a bid. He added that he is working on setting up a new apparel company.

Charney, with support from investors that included Hagan Capital Group and Silver Creek Capital Partners, had mounted an unsuccessful $300 million bid for American Apparel in January.

Houlihan Lokey declined to comment.

Charney was fired as chief executive officer of American Apparel in 2014. The company cited inappropriate behaviour and misuse of company funds.

In March, American Apparel named the former head of handbag retailer Liz Claiborne Inc, Paul Charron, as chairman of its new board of directors.

Teen clothing retail has been hit by the growing popularity of online shopping. At least eight teen apparel retailers have filed for bankruptcy this year amid fierce competition and stagnating sales, including Aéropostale Inc, Pacific Sunwear of California Inc, The Wet Seal Inc.

News and data provider Reorg Research first reported on American Apparel working with Houlihan Lokey on a sale.

By Lauren Hirsch and Jessica DiNapoli.