Navigate to News section

Dov Charney Booted From American Apparel

Clothing company’s CEO and chairman ousted over ‘alleged misconduct’

Stephanie Butnick
June 19, 2014
An American Apparel store front is seen in lower Manhattan August 18, 2010 in New York. (DON EMMERT/AFP/Getty Images)
An American Apparel store front is seen in lower Manhattan August 18, 2010 in New York. (DON EMMERT/AFP/Getty Images)

Dov Charney, the notoriously lecherous founder of American Apparel, has been ousted from his role as chairman and CEO of the popular purveyor of crop tops and neon leggings, BuzzFeed reports. The retailer’s board of directors released a statement citing “an ongoing investigation into alleged misconduct” as the reason behind their vote to replace Charney, and plan to fire him “for cause.”

“The board’s decision to replace Mr. Charney grew out of an ongoing investigation into alleged misconduct,” the company said in the statement.

“We take no joy in this, but the Board felt it was the right thing to do,” Allan Mayer, one of the directors who will be co-chairman, said in the statement. “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.”

While the company didn’t comment on the specific misconduct that led to Charney’s ousting from the company he founded in 1991, allegations of impropriety—ranging from rumors of general lewdness to sexual harassment lawsuits from former employees—have followed Charney for years. According to The Cut, the board seems to have gotten tired of defending Charney against the barrage of legal action.

The company’s well-documented recent financial struggles may have also had something to do with the sudden change in leadership. According to the Wall Street Journal, American Apparel had been facing consistent losses and plunging stock values.

The Los Angeles-based maker of casual clothing had enlisted lawyers at Skadden, Arps, Slate, Meagher & Flom LLP to work on restructuring options, people familiar with the matter said earlier this year. The move came as some of the company’s bondholders had started to organize, the people said.

The company has struggled over the years, coming close to breaching loan covenants—debt terms designed to protect its lenders—some of the people said. The company in late January said it refinanced the majority of its debt.

We’ll see if Charney still agrees with his adage from a few seasons ago: “There’s nothing like the shmata business.”

Stephanie Butnick is chief strategy officer of Tablet Magazine, co-founder of Tablet Studios, and a host of the Unorthodox podcast.