After Ousting Founder Dov Charney, Did American Apparel Boot Its Brand Too?

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Nearly a decade ago, Dov Charney called me from the back of a limousine (I only knew it was a limousine because he told me). Charney had emailed me earlier “to have a dialogue with you about some of the interesting points you raise in your article.”

That article was a brandchannel profile of the fast-rising American Apparel brand and sweatshop claims that ultimately concluded that “AA’s founder Dov Charney is himself the greatest threat to American Apparel’s future.” Charney eventually begged off that talk, saying we should do a proper interview after the Athens Olympics. We proceeded to play phone tag for the next three years, and I never spoke to him again.

And now I don’t need to—at least not in the context of his strategy for American Apparel. The brand’s board voted 5-0 to oust Charney, citing “an ongoing investigation into alleged misconduct.”

Charney’s “alleged misconduct”—much of it sexual in nature—has been well-documented for years. In fact, Charney is so well-known for his misbehavior that he’s become a bit of a cliche, often lumped in with controversial fashion photographer Terry Richardson—and an eyesore for the American Apparel brand.[more]

It’s just as easy to see the board booting Charney for what, in the business world, is a much greater crime than sexual malfeasance: a lack of profit. “He’s going to fight like hell to get his company back,” a source told the Los Angeles Times, “but he won’t succeed.” 

In the last four years, American Apparel’s stock has bounced around like a hipster high on Molly at a music festival. But the trend has been down, way down. From $15.80 a share in 2007, to $6 a share in 2009, AAP stock can now be had for three quarters, and you might even get a few pennies change back.

The brand lost $37 million in 2012. In 2013, under Charney, it grew those losses to $106 million, even while the now-out CEO talked about the possibility of a billion dollars in sales with entire new product lines worth $100 million.

Amongst American Apparel’s bad moves under Charney was that it expanded too far and too fast in an attempt to become the Starbucks of v-neck t-shirts. But more so, it turns out, what looked bleeding edge hip in 2004 is easily copied. The comfortable blends and rainbow hues that set American Apparel stores apart are now a staple of chains like Uniqlo and H&M.

In a January interview with Marketplace, Charney admitted, “I’m my own worst enemy.” But that turns out to be only half the case. He was also the worst enemy of American Apparel.

But a perverse irony faces American Apparel. Call Dov Charney what you want, but the Canadian transplant was not only American Apparel’s founder but its biggest brand evangelist—its face and soul. Without him, what is American Apparel?

• Connect with Abe on Twitter: @abesauer

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