American Apparel finally gave the heave-ho to Dov Charney, who founded the company 25 years ago in his Tufts University dorm room, when the trendy garment-maker’s board of directors fired its 45-year-old CEO after years of scandal allegations surrounding his extraordinarily hands-on and, some said, inappropriate management style.
Over the years, Charney has been sued for sexual harassment, facing accusations that he even kept a woman as a sex slave and forced another to perform oral sex on him. His company was also once sued by filmmaker Woody Allen for using Allen’s image in an ad without permission. Los Angeles-based American Apparel ended up paying Allen $5 million to settle the case.
In one highly publicized 2004 incident which came to be emblematic of Charney’s unsettling and often sleazy public persona, the Montreal-born entrepreneur gave an interview to a female reporter from Jane Magazine, during which he exposed himself and masturbated in front of the journalist.
“Masturbation in front of women is underrated,” he told the writer, Claudine Ko, adding that he found the inappropriate activity to be “a sensual experience.”
But despite the numerous accusations against Charney — including one in which Charney, who is Jewish, allegedly berated an American Apparel store manager by calling him a “wannabe Jew” and a “fag,” after throwing dirt at the man and choking him — the company’s board always stood behind their controversial chief executive.
What was different this time? The board wouldn’t say, other than stating that Charney’s termination “grew out of an ongoing investigation into alleged misconduct,” and that the CEO was fired “for cause.”
But the real reason could have something to do not with the way Charney behaved, but the way the American Apparel finances have performed.
The clothing maker, which has often courted controversy for its racy and sexually suggestive public advertising displays, lost a staggering $106.3 million last year, after losing $37.3 million in 2012.
There were strong indications that investors blamed Charney for the plummeting fortunes of American Apparel, that narrowly averted bankruptcy in 2011 following an $85 million loss.
Wall Street responded with apparent jubilation to news that the American Apparel board had voted unanimously to give Charney the axe, sending the company’s stock on a roll, increasing in price by 14 percent when markets opened Thursday morning.
The board issued a statement saying that though its members “took no joy” in cutting ties with Charney, “it was the right thing to do.”
Charney himself has not publicly responded to his firing, but an inside source speaking to The Los Angeles Times said that Charney planned to “fight like hell” to regain control of American Apparel. But, the source added, “he won’t succeed.”