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Yui Mok/PA Archive
Out the door

Struggling label American Apparel has fired its founder and CEO over allegations of misconduct

Don Charney has been accused of sexual harassment by several of his own employees.

STRUGGLING INTERNATIONAL FASHION label American Apparel said today it is firing its founder and chief executive as part of an “investigation into alleged misconduct”.

Canadian Dov Charney has been suspended and will be let go in the next 30 days, the company said in a statement.

Charney, who was known for sometimes walking around his factories in his underpants, has been accused of sexual harassment by several of his own employees.

“We take no joy in this, but the board felt it was the right thing to do,” Allan Mayer, who has been appointed with David Danziger as co-chairmen of the board to replace Charney, said in a statement.

Chief financial officer John Luttrell, a veteran of the textile industry, was also named as interim chief executive officer.

HISPANICS BOYCOTT AP / Press Association Images AP / Press Association Images / Press Association Images

“Dov Charney created American Apparel, but the company has grown much larger than any one individual and we are confident that its greatest days are still ahead,” Mayer added.

Charney founded American Apparel in 1989 in Montreal before moving its headquarters to Los Angeles.

The company grew aggressively for many years and broke with the crowd with what it calls a “sweatshop-free, Made in USA manufacturing philosophy”, keeping much of its production in its California factory.

American Apparel has approximately 10,000 employees and operates 249 retail stores in 20 countries, according to the statement. It has one branch in Ireland on Dublin’s Grafton Street.

But the firm has struggled financially. Last year it lost $106.3 million (€78 million) on revenue of $633.9 million. That comes on top of losses of $37.3 million in 2012 and $39.3 million in 2011.

Charney’s dismissal could now force American Apparel to default under its credit agreement and it is now holding discussions with lenders, the company said.

American Apparel shares, which in the past had exceeded $15, fell 1.5 % at close on Wednesday to $0.64.

- © AFP, 2014

Read: American Apparel’s new underwear model is 62 years old > 

Read: ‘Traditional marketing is dead or irrelevant’ – American Apparel’s marketing guru > 

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