American Apparel Inc.’s board of directors moved to fire founder, President and CEO Dov Charney for an “ongoing investigation into alleged misconduct.”
Charney inappropriately discussed his personal sex life in the work place, and he was even known to stroll through the factory in nothing but his underwear. He is at the center of several cases, filed in courts in New York and Los Angeles, with claims of “sexual harassment, assault and battery, impersonation through the Internet,” among others.
When four female employees filed to sue Charney for sexual harassment in 2011, American Apparel’s lawyers defended Charney, as reported in a 2011 Los Angeles Times article. They asserted that the plantiffs’ claims were “meritless” and a way to “shake down Mr. Charney and American Apparel for money.”
In 2012, a store manager, fired by Charney, filed a wrongful termination lawsuit. The plaintiff, Michael Bumblis, claimed that Charney called him “a wannabe Jew,” and a “fag.” There was also a report of an altercation in which Charney attempted to choke Bumblis and rub dirt into his face, according to a 2012 Times article.
CFO John Luttrell will fill in as interim CEO. Public relations executive and board member Allan Mayer, along with board member David Danziger, was appointed co-chairman.
“This is not easy, but we felt the need to do what we did for the sake of the company,” Mayer told the Times. He claims the decision to terminate Charney’s employment “was not the result of any problems with the company’s operations.”
However, the company has been struggling in recent years. In 2013, American Apparel reported a net loss of $106.3 million, compared to a loss of $37.3 million in 2012.
According to a Wall Street Journal article, the company reported a net loss of $5.5 million for the opening quarter of this year, which is an improvement from the $46.5 million loss reported a year earlier.
American Apparel announced in March they intended to sell $30.5 million in stocks to pay off debts, according to the Times.
The decision could leave the company in default for its inability to restructure its debts with lenders.
With about 27 percent of American Apparel stock, Charney is the largest individual shareholder of the company.
Photo: Keith Bedford/Bloomberg