American Apparel Ousts Controversial CEO Dov Charney

In Reports, What's New, People by Jeff Prine

Dov Charney, found and controversial leader at American Apparel

Dov Charney, found and controversial leader at American Apparel

Los Angeles—Dov Charney, the flamboyant, controversial chief executive officer of American Apparel–who has been the subject of lawsuits and sexual misconduct allegations–finally got his comeuppance.

On Wednesday, after American Apparel’s annual meeting, the board of directors decided to strip Charney of his chairman/chief executive roles, suspending him immediately and terminating him after 30 days. Wall Street reacted favorably to the news—shares rose 7% in trading earlier today.

Charney, 45, declined to comment on his ouster.

Successor to be ‘Conservative’

According to board director Allan Mayer, the decision to replace Charney “grew out of an ongoing investigation into alleged misconduct. The board felt it was the right thing to do Dov Charney created American Apparel, but the company has grown much larger than any one individual and we are confident that its greatest days are still ahead.”

The move also signaled what could be describes as “big, drastic changes” at the specialty retailer.

Other analysts said American Apparel could be headed for layoffs, store closures, bankruptcy, a sale and even a shift away from the “made in America” manufacturing strategy Charney championed.

What happens will also depend upon who Charney’s successor might be. Analysts said that person will likely be a less provocative executive, possibly an older person or someone with a family.

For years Charney battled against sexual harassment lawsuits. Four female former employees filed a sexual harassment lawsuit in 2011. They were described as friends who were to “shake down” Charney and the company for money and that there was “voluminous evidence” disproving their allegations, American Apparel said at the time.

In 2012, Charney was accused in a wrongful termination suit of choking and rubbing dirt in the face of a former store manager in Malibu. Charney also allegedly used ethnic and homophobic slurs against an employee and asked whether he was sleeping with a certain woman.

American Apparel denied the allegations.

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