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American Apparel ousts Charney, probes misconduct allegations

American Apparel Hipster Turns Preppy As Stock May Be DelistedAmerican Apparel Hipster Turns Preppy As Stock May Be Delisted
Dov Charney.Photograph by Keith Bedford — Bloomberg via Getty Images

Dov Charney’s charmed life as head of American Apparel (APP) has finally come to an end.

The company’s board said late Wednesday it had suspended its Montreal-born founder, president and chief executive with immediate effect and intends to “terminate him for cause”, citing an “ongoing investigation into misconduct.” A clause in Charney’s contract stipulates that a 30-day “cure period” has to be observed before it can be terminated.

“We take no joy in this, but the board felt it was the right thing to do,” board member Allan Mayer said in a statement. Mayer has been elected co-chairman along with David Danziger, said in a statement.

It wasn’t clear what had ultimately caused the board’s patience with Charney to snap. Charney has fended off accusations of repeated sexual harassment of employees in the past, and of discriminating against less good-looking staff on the grounds that they undermined the “AA aesthetic”. The company has also consistently courted controversy and publicity with ads featuring lots of nudity.

American Apparel insists that its hiring practices are not discriminatory.

Chief financial officer John Luttrell will take over as interim CEO until a permanent replacement for Charney can be found.

The heavily-indebted company said the suspension also triggers clauses in its  debt agreements that mean its creditors can hold it to have defaulted. American Apparel said in its statement it will be in discussions with its lenders for a waiver.