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American Apparel Ousts Founder Dov Charney For "Alleged Misconduct"

Dov Charney in 2009 (Getty Images)
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American Apparel's board of directors voted to remove founder and CEO Dov Charney from the company. The clothing company said in a press release that it came to its decision during its "ongoing investigation into alleged misconduct."

The LA-based company's new co-chairman, Allan Mayer, told the Times, "This is not easy, but we felt the need to do what we did for the sake of the company," adding it "was not the result of any problems with the company's operations." As for claims about Charney sexually harassing employees and holding a teen employee as a sex slave (which Charney denied) from the past few years, Allan said, "A board can't make decisions on the basis of rumors and stories in newspapers," and said "new information came to light."

American Apparel promoted its made-in-the-USA philosophy and good working conditions for factory workers at its Warehouse Street location. It also offered provocative advertising and window displays (full bush mannequins, anyone?), and there were rumors that Charney "beauty profiled" retail employees.

Charney was notified about his termination by letter. It will be complete after 30 days. When a LA Times reporter called him, he hung up.

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The NY Times notes, "The decision also comes after years of financial underperformance, including times when the company needed rescue financing to stay afloat. Shares in the retailer have fallen 84 percent over the past five years, to 64 cents as of Wednesday’s close." American Apparel stock prices are up thismorning, but it's only 74 cents.

Interim CEO John Luttrell said, "We have one of the best known and most relevant brands in the world, with employees who are second to none; I believe we have a very exciting future. Our core business—designing, manufacturing, and selling American-made branded apparel—is strong and continues to demonstrate great potential for growth, both in the U.S. and abroad. This new chapter in the American Apparel story will be the most exciting one yet."