In 2008, Dov Charney’s American Apparel was a hot topic. Hipsters nationwide were embracing the chain’s edgy basics, the brand was ramping up its immigration advocacy, its billboards were getting steamier and the stock price was surging to new highs.
Since then, shares have lost more than 90% of their value, closing at 68 cents Thursday, the day after Charney was unceremoniously dumped by his board of directors. Measurements of consumer perception have the brand trailing its rivals among teen and young adult shoppers.
Only one of the last 17 quarters has been profitable for American Apparel; the last time the company reported an annual figure that wasn’t a net loss was 2009. Over the last four years, the company has lost nearly $270 million.
Same store sales, which strip volatility by accounting only for locations open at least a year, dipped 7% in the first quarter.
The company lost Adrian Taylor, its vice president of finance and controller, to another company in early March. Chief Financial Officer John Luttrell, who in the wake of Charney’s ouster Wednesday is serving as interim chief executive, assumed Taylor’s duties.
In March, American Apparel said its fraught negotiations with financiers would force it to delay its annual report for the 2013 fiscal year. Around the same time, the company was trying to appease the New York Stock Exchange, which was threatening to delist the Los Angeles manufacturer and retailer for failing to meet its standards.
Crystal Financial, backed by billionaire financier George Soros, extended an $80- million line of credit to American Apparel in 2012.
Last year, Charney’s compensation package totaled $1.07 million, a steep pay cut from the $14.5 million in 2012 and $11.6 million in 2011. Over four years, he earned nearly $28 million.
Now, with Charney no longer at the helm, Wall Street is aflutter with debates over the company’s future: Will its next chief executive take manufacturing abroad? Will the company be sold or parceled off to the highest bidders? Will the absence of a controversial poster boy cause American Apparel to fade amid an onslaught of competitors such as H&M, Forever 21 and Zara?
As long as the company stays public, Charney may continue to have a say: He owns 27% of American Apparel stock, according to regulatory filings.
Follow Tiffany Hsu on Twitter at @tiffhsulatimes