American Apparel fires founder, names new chief executive

Six months after abruptly removing its founder, Dov Charney, as chief executive, American Apparel chose longtime retail executive Paula Schneider as its new leader.

Ms Schneider, who served in senior management roles at BCBG Max Azria and Laundry by Shelli Segal, will take over as chief executive in early January the company said Tuesday.

Ms Schneider most recently worked as a consultant.

Mr Charney, who had led American Apparel since 1998, earned a reputation for outlandish behaviour and hyper-sexualised ad campaigns. More than once, former employees accused him of sexual harassment. For years, he survived the scandals. But the slow burn of accusations flared this summer when an internal investigation found that Mr Charney had misused company funds. It also determined that he had allowed an employee to post on the Internet nude photographs of a former female employee who had sued him.

"The brand is actually a fairly decent brand," said Craig Johnson, president of Consumer Growth Partners, a retail research and consulting firm. "It's a retrievable brand, and there's no reason, I don't think, that she won't be able to do that."

The board suspended Mr Charney in June and appointed a consultant, Scott Brubaker, as interim chief executive. But Mr Charney fought back. He teamed up with an investment firm, Standard General, to take a larger stake in the retailer, and for a time it appeared he had a chance of regaining control.

Regain influence

In a statement, Mr Charney suggested that he would maintain a relationship with the retailer through his still sizable holdings of American Apparel stock, leaving open the possibility that he would seek to regain influence there.

“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,” Mr Charney said in a statement sent through a representative.

“Naturally, I am disappointed with the circumstances and my over 25 years of deep passion and commitment for American Apparel will always be the core DNA of the company,” he said. “I wish the company continued success.”

A spokesman for the company declined to comment.

Mr Charney has been a consultant to the company during his suspension, a relationship that will end with Ms Schneider’s appointment.

American Apparel's heyday was before the 2008 financial crisis. It became almost as well known for its sexually suggestive ad campaigns, which often looked as if they had been shot using a Polaroid camera, as for its clothing. But the company's stock has steadily fallen over the past five years as the retailer has struggled with internal problems as well as the broader headwinds facing the retail industry.

Ms Schneider will now take on some of those challenges.

"This company needs a permanent CEO who can bring stability and strong leadership in this time of transition, and we believe Ms Schneider fits the bill perfectly," said David Danziger, a co-chairman of American Apparel's board.

Mr Danziger went on to thank Mr Brubaker, who will remain a consultant for the company “to ensure an orderly transition,” according to a statement.

Johnson, the retail consultant, said, "The main thing is, they need stability and they need integrity right now."

New York Times