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American Apparel fires Dov Charney, names new CEO

December 16, 2014, 10:41 PM UTC
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Dov Charney, chairman and chief executive officer of American Apparel Inc., stands for a portrait in a company retail store in New York, U.S., on Thursday, July 29, 2010. Starting the company in a dorm at Tufts University in Medford, Massachusetts, Charney built a worldwide empire of 280 clothing stores by leaping out ahead of mainstream fashion. He personified the racy, risk-taking aesthetics of his business and is now facing the consequences - skittish lenders and investors who doubt his ability to oversee his own creation. Photographer: Keith Bedford/Bloomberg via Getty Images
Photograph by Keith Bedford — Bloomberg via Getty Images

American Apparel has fired CEO Dov Charney six months after suspending him for alleged misconduct.

The clothing retailer said on Tuesday that it had appointed Paula Schneider, a veteran fashion executive, as his replacement. Schneider has previously worked at clothing group Warnaco and women’s apparel company Big Strike, will take the reins of the struggling clothing retailer on January 5, 2015.

American Apparel (APP) says it has terminated Charney, who was removed from the CEO role in June after the company alleged he had misused corporate money and violation of sexual harassment policies. Over the years, Charney has faced repeated accusations of sexually harassing employees and of discriminating against less attractive staff on the grounds that they undermined the corporate aesthetic.

Charney had been serving as a consultant to the company in recent months, but American Apparel said on Tuesday that he has been terminated for cause.

Charney, who founded American Apparel 25 years ago, was initially replaced by interim CEO John Luttrell, who also served as the company’s chief financial officer. But, Luttrell was removed from both roles in September, when turnaround expert Scott Brubaker of restructuring firm Alvarez & Marsal took over as the new interim CEO. Brubaker will continue in that role until Schneider takes over in early January.

David Danziger, co-chairman of American Apparel’s board, said in a statement that the retailer “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.”

Once one of the trendier, youth-focused retailers in the industry, American Apparel has seen its sales fall off in recent years. The company’s same-store sales declined 7% last quarter and it reported another net loss.

In a statement, Schneider said “My goal is to make American Apparel a better company, while staying true to its core values of quality and creativity and preserving its sweatshop-free, Made in USA manufacturing philosophy.”