Business

After American Apparel board ousts Dov Charney, workers left in dark

American ApparelStock MarketNYSE Euronext, Inc.
American Apparel kicks out CEO Dov Charney, doesn't tell workers

The lights were on at the American Apparel factory complex in downtown Los Angeles late Wednesday. Several workers milled around the parking lot chatting and eating snacks.

Few, if any, had heard that their boss, Chief Executive Dov Charney, had been ousted by the retailer’s board of directors hours earlier.

One man said he was "speechless." A woman said she often saw Charney, 45, strolling through the facility and had spotted him as recently as Tuesday. But there was no sign of him on Wednesday, she said.

The board voted after its annual meeting to replace Charney as chairman and also intends to remove him as president and chief executive “for cause,” according to a company statement.

The move stemmed from an ongoing investigation into alleged misconduct and not due to “any problems with the company’s operations,” Allan Mayer, American Apparel’s newly appointed co-chairman, told The Times.

"I just want to pass out -- it's unbelievable," said recycling employee Jesse Craig, 27, of Charney’s firing. "He's the head honcho. He's a role model. I'm shocked."

Craig, a downtown resident who’s worked for two years at the factory, said he admires Charney’s rags-to-riches story. The Canadian immigrant ran American Apparel from his dorm room at Tufts University and built it into a company with 10,000 employees as of a year ago and net sales of $617.3 million in 2012.

But that year, the company suffered a $37.3-million loss and then reported a net loss of $106.3 million the next year. The retailer said in March that it hopes to sell $30.5 million worth of stock to fund its debt payments.

American Apparel -- whose tortured negotiations over financing led it to delay its annual report -- was recently in danger of being delisted by the New York Stock Exchange. Since the beginning of the year, the company’s stock has tumbled nearly 50%, closing at 64 cents a share on Wednesday.

Craig, the employee, said the company enforces fair hours and pays wages that are “cool for entry level.” Charney was often at the downtown factory and was “friendly but business oriented,” Craig said.

"He'll speak to you every now and then but he's here to check on the business," he said.

The company also operates a fabric dyeing and finishing facility in Hawthorne; a cutting, sewing and garment dyeing and finishing plant in South Gate and a multi-purpose operation in Garden Grove, according to a September regulatory filing. 

Charney has been a controversial figure for years, trailed by lawsuits and allegations of sexual harassment and other misconduct and criticized for his saucy advertising strategy and strong stance on immigration.

Craig said he'd read online about the harassment accusations against Charney but didn't know too many details and hadn't seen evidence of it in person.

"I'm against that kind of behavior, but it happened behind closed doors," he said. “Now, we really don’t know what to expect, but hopefully it gets better, not worse.”

Follow Tiffany on Twitter at @tiffhsulatimes.

Copyright © 2014, Los Angeles Times
Related Content
American ApparelStock MarketNYSE Euronext, Inc.
Comments
Loading