American Apparel has fired CEO and founder Dov Charney, citing “an ongoing investigation into alleged misconduct” by Charney, who has been repeatedly accused of sexually harassing employees in the past.
One source told the Los Angeles Times that Charney’s misconduct wasn’t criminal but involved his personal behavior with women, and the company’s new co-chairman said it hadn’t acted sooner because “a board can’t make decisions on the basis of rumors and stories in newspapers.”
Charney had been accused of sexual harassment by seven different employees in the past, including allegations of harassment by phone and sexual assault in person. Some of the lawsuits that sprung out of those claims had reportedly been settled without payment or otherwise found to be without merit. At one point the company had backed Charney aggressively in response to harassment allegations, telling the Los Angeles Times that four of Charney’s accusers were attempting to “shake down” the company and CEO in 2011.
Wednesday’s unanimous board vote to boot Charney is therefore a significant reversal from the company’s previous support for its notorious chief. Board members had initiated a formal investigation into allegations against Charney after “new information came to light,” new co-chairman Allan Mayer told the Times. That investigation hasn’t wrapped up, but it apparently produced enough information to convince the board to dump the company’s founder. An unnamed source told the Times that the “problems did not appear to be criminal in nature, but involved his personal conduct with women and poor judgement.”
“Our decision to do what we did was not the result of any problems with the company’s operations,” according to Mayer. But the company is at a difficult juncture financially, with a net loss of over $100 million last year alone and too little cash on hand to pay its debts. The company hasn’t turned a profit since 2009, Quartz notes.
The brand’s identity has long been shaped by Charney’s outsized personality, for good or ill. The company prides itself on producing all its clothing in the United States. Charney liked to point out that he ran a sweatshop-free company, and publicly assailed the whole garment industry for its inhumane labor practices following the collapse of a Bangladesh clothing factory that killed more than 1,000 people. But his alleged lewdness with employees was also reflected in American Apparel’s public image, which has often relied on particularly risque advertising to sell clothes. The company’s marketing has been labeled sexist because many of the company’s ads feature women posing naked, but its promotional images of men show them fully clothed.
New interim CEO John Luttrell represents a stark shift, according to Quartz’s Lily Kuo. Where Charney dropped out of a small liberal arts college in New England, Luttrell graduated with honors from Purdue. Running American Apparel, first out of a dorm room and later out of a Los Angeles office, had been Charney’s only professional pursuit. The 59-year-old Luttrell has worked in senior management positions with a number of major retail brands prior to serving as American Apparel’s chief financial officer.