Published On: Thu, Jun 19th, 2014

Dov Charney about to be ousted from American Apparel, the company he founded

 

Charney,  founder and chief executive officer of the fashion giant may  be fired  by the company board, who is citing an “ongoing investigation into alleged misconduct ” as their principal reason.

 

 

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Dov Charney,  chief executive officer of American Apparel, the company which he founded as a teenager and help grow into a billion dollar fashion super power, is reportedly on the brink of being relieved  of his responsibilities  of his fellow board members.

According to a recent statement  the  American Apparel board intends to dismiss  Charney from the company that he founded as a teenager in 1988 once a pre-determined  30-day period, to resolve an critical boardroom  conflict has  elapsed, without an agreement to  the undisclosed  conflict being resolved.

Taking into account Dov Charney’s often erratic management style, and his volatile relationship with the board the chances of the problematic issues being resolved, according to those aware of the workings of the company, seem remote at best.

In the meantime, the  American Apparel board  has named  the current Chief Financial Officer John Luttrell as interim CEO whilst  naming   Allan Mayer and  David Danziger as co-chairmen.

The increasing likelihood of Dov Charney’s dismissal began to gain momentum  at the end of May , when American Apparel first quarter results showed a loss of  $5.5 million for the first quarter, following no major improvement on the losses that the company returned consistently through 2013.

American Apparel,  whose financial history has almost always been checkered, underwent a major fiscal reconstruction in the spring of  2013, when the company  issued a private offering of $206 million in senior secured notes, in the process  eliminating  the long-standing, high-interest debts which the company had incurred during its years of rapid development, with Dov Charney at the helm.

Despite the strong possibility that  Charney may not be on the board of American Apparel for much longer, he will still remain the company’s largest shareholder at 27%.

 

Dov Charney, who admits to having a long term passion for  T-shirts, founded American Apparel  during his  freshman year at Tufts University in Boston, initially specializing in   personalized screenprinting, importation and other aspects of the apparel business,

In 1997 Charney moved with his company to the West Coast, three years later moving into a massive seven-story 800, 000-square-foot warehouse in downtown Los Angeles, with the company enjoying continued growth as  an importer and wholesaler, principally dealing in blank T-shirts, marketing them  to screenprinters, uniform companies and fashion brands.

In 2000 Dov Charney made a radical decision to discontinue importing the shirts that he marketed from the Far East, and convert his warehouse into a production facility,  while becoming a particularly  outspoken advocate of immigration reform and better wages.

In line with his personal standpoints, Dov Charney payed his  more than 4, 000  production employees  an average of over twelve dollars an hour, meaning that they would  often earn  $100 or more a day, in the knowledge that a typical employee in the  garment industry in China and other AIPAC countries, were paid the equivalent of  40 cents per hour.

The  American Apparel factory claims to have the capacity to produce one  million shirts per week from a range of more than 55, 000 different garments.

Ever expanding and diversifying, the next step for Dov Charney and  American Apparel was to move into the retail industry, with the company operating in excess of 200 retail outlets, running across the United States, as well as in Europe and Asia,

American Apparel is also one of the few companies involved in the garment industry that actually succeeds in exporting their products under the  “Made in the USA” label, with sales amounting to hundreds of  millions of  dollars every year.

 

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