American Apparel's Founder Is Out, Tailed By Reports Of Misconduct

The board of American Apparel has voted to removed the company's founder and CEO, Dov Charney, from his leadership positions. The decision follows allegations of sexual misconduct against Charney.

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ROBERT SIEGEL, HOST:

From NPR News this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, HOST:

And I'm Melissa Block. America Apparel has ousted its founder, his name is Dov Charney. The clothing company had dealt with allegations of misconduct against him and lawsuits for years. NPR's Sam Sanders reports.

SAM SANDERS, BYLINE: You probably know American Apparel or at least their advertising - big billboards across the country with images of scantily clad young women in suggestive blush-inducing poses. Well, Dov Charney, the man who created American Apparel in his Tufts University dorm room is gone. The Board of Directors said it voted to replace Charney as chairman and terminate him as president and CEO. American Apparel's current chief financial officer will be interim CEO.

New Board co-chair Allan Mayer said in a statement, we take no joy in this, but the Board felt it was the right thing to do. For years, Charney has been a lightning rod. There have been numerous lawsuits against him and allegations of sexual misconduct. One employee accused Charney of making her his sex slave. Charney's always denied the allegations. Here he is in a 2012 CNBC interview.

(SOUNDBITE OF ARCHIVED RECORDING)

DOV CHARNEY: It's also a testimony to my success though. I mean, the fact that I'm a target for baseless lawsuits...

UNIDENTIFIED REPORTER: All lies?

CHARNEY: No, I'm not going to sit here and go through, you know, thousands of pages or something, but the allegations that I acted improperly at any time are completely fiction.

JEREMY SHELDON: This ongoing pattern of deplorable behavior - you couple that with really poor financial performance - you just had to feel that this guy was living on borrowed time.

SANDERS: That's Jeremy Sheldon, and analyst with IHL Group. He says American Apparel has some major financial problems. Last year the company reported a net loss of over $100 million. The stock trade's well under a buck. Sheldon says even with Charney gone, American Apparel's still got a lot to fix.

SHELDON: Whatever damage he's done internally to the corporate culture - the scars of a caustic work environment can last a lot longer.

SANDERS: Life after Charney for American Apparel is going to be hard. Just today the company told the SEC it may have to file for bankruptcy, since ditching Charney may void two major credit agreements. Sam Sanders, NPR News.

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