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.
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.