American Apparel executives urge board to reconsider CEO Dov Charney's sacking
17 Dec 2014
American Apparel Inc's incoming chief executive officer Paula Schneider has received an unusual reception with a group of senior managers asking the board to reconsider the sacking of former CEO and company founder Dov Charney, Bloomberg News reported citing a letter it had obtained.
According to the managers, Charney should be a part of the retailer's future by helping the next CEO improve the chain because he was what ''makes this thing tick.''
The Charney loyalists' actions only add to the new CEO's worries with her hands full already with losses amidst sluggish sales.
Losses at the chain had mounted to over $300 million net, since 2010, forcing it to raise capital to make ends meet -- most recently in July.
Schneider also has to contend with image problems at a company that had been criticized for its racy advertising and sexually-charged culture.
The Los Angeles-based clothing retailer officially fired Charney on Tuesday, bringing to a close the saga that started with board suspending him in June for misconduct.
In their termination move, the directors had cited infractions such as failure to adhere to the chain's sexual harassment policies and using company funds for family members' travel expenses. Charney's lawyer dismissed the allegations as ''baseless.''
The New York Times reported that Charney, who had led American Apparel since 1998, earned a reputation for outlandish behaviour and hyper-sexualised ad campaigns an had been accused by former employees of sexual harassment several times.
Though Charney managed to survive the scandals, matters came to head this summer when an internal investigation found that Charney had misused company funds. The investigation also determined that he had allowed an employee to post on the internet nude photographs of a former female employee who had sued him.
According to Craig Johnson, president of Consumer Growth Partners, a retail research and consulting firm, the brand was actually a rather decent brand. It was a retrievable brand and there was no reason Schneider would not be able to do that, he added.
Meanwhile, Charney said in a statement, ''I'm proud of what I created at American Apparel and am confident that, as its largest shareholder, I will have a strong relationship with the company in the years ahead.''
