Published On: Mon, Jan 26th, 2015

Can Paula Schneider Work her Magic at American Apparel?

Paula Schneider

Paula Schneider, who has been a retail turnaround artist at Warnaco and Big Strike, is likely to work her magic as new CEO of American Apparel after Dov Charney was finally ousted after a period of scandal and underperformance. At Warnaco, which makes swimsuits for Speedo and Calvin Klein, Schneider realized a 25% increase in direct operating profit and increased revenues at Big Strike by 19%.

Dov Charney did manage to build the largest apparel manufacturer in North America, with simple, irresistible brands. The company’s U.S.-based factories generate as much as 10, 000 jobs and the fact that American Apparel has its own factories saves costs for the company as well as allowing it to have flexibility. However, Charney got sloppy in his management and personal behavior, which were main causes for his ouster. A female CEO is a welcome change after the brand’s “borderline pornographic often misogynistic advertising, much of it stemming from founder Charney’s sleazy persona.” (Well, Forbes said it, so I didn’t have to).

Paula Schneider has a four-pronged plan for fixing American Apparel. The first aim is to improve fundamentals, second, to invest in and grow the brand, third, increase EBITDA and earnings and fourth, focus on liquidity. She also plans to monitor what merchandise is working, what isn’t and increase and decrease accordingly.

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