Dov Charney Dishes On The End Of American Apparel
American Apparel is no more. The clothing company filed for bankruptcy in November, and was auctioned off earlier this month to Gildan, a Canadian clothing manufacturer.
Gildan bought American Apparel's intellectual properties, but decided to forgo the retail stores and the manufacturing facilities (much of which are based in L.A.). As a result, about 3,500 people will be losing their jobs.
On Tuesday, KPCC's Take Two aired the first of a two-part interview with Dov Charney, American Apparel's notorious founder and former CEO (the company severed ties with him in 2014). Charney spoke with host Libby Denkmann on the reasons for American Apparel's steep decline. He also touched on the allegations of sexual harassment that had plagued him during his tenure at the company. Not surprisingly, Charney was animated during the interview, and at times he seemed indignant, almost to the point of shouting (this was especially true when the sexual harassment allegations came up in discussion). Here are some snippets from that talk:
On the successes of American Apparel (while he was there):
The company was performing. It had an operational profit. It was a huge success story. Our gross profit margins exceeded that of Urban Outfitters or the Gap. This was a company that was the pride of the industry. The pride of the worldwide apparel industry. We were earning about $300 million in gross profits a year. The company was generating $634 million in sales in the year prior to my ousting, which was a record.
And then someone had the great idea—the Chief Financial Officer had the great idea—that the company should be sold. And I was offered $100 million for my stake in American Apparel.
He declined the offer, but...
...then a few weeks later. Maybe 10 to 15 weeks later, there was an annual meeting...I voted for three board members, who collaborated with two others, total of five, and they said "Either give us the voting rights to your stock, or we're going to fire you with cause and create a media firestorm."
Denkmann brought up a couple topics that hovered over Charney during the time of his ousting, namely the allegations of sexual harassment, as well as the company's claim that they were in heavy debt. On the "flurry" of sexual harassment allegations (as Denkmann described it), Charney said:
That's fake news. There was no flurry of sexual harassment lawsuits. There haven't been any sexual harassment allegations since January of 2011. 2012 went by and I was re-hired. The company disclosed in 2010, '11, '12, '13 and '14 that these sexual harassment lawsuits were frivolous and baseless.
He added that:
There was no issue relating to the debt. That's a fiction. The sexual harassment lawsuits—the flurry of sexual harassment lawsuits—was a fiction.
Speaking more on what caused the downfall of American Apparel, Charney kept coming back to one thing: that he was let go. He claimed that the company board had "exculpated myself, about a 100 managers, 20 creatives that were running this company." He also pointed to a later deal he made with Standard General, an investment firm, who apparently told Charney that they'd help put him back in the driver's seat. Charney told Denkmann that the firm backstabbed him and took over themselves:
They then with no experience took over the company, installed their own management team, which was largely made up of consultants, traditional consultants, conventional people that don't understand the creative process.
He said that the new managers "disemboweled the culture" and claimed that, "'suddenly, the sales go from $600 million to $300 million."
Of course, this is only Charney's side of the story. And, if Charney's claims are true (that he was innocent of any wrong-doing, and that the company was always thriving), it leaves us wondering why he was given the boot from the company. Maybe his accusations are true? That the board was just simply greedy, corrupt, and possibly out to get him? But this seems too simple.
Either way, Take Two is expected to release the second part of the interview on Wednesday. According to KPCC, in this installment Charney will speak on his new project, and whether he may hire some of his former employees.