American Apparel updates its ethics code after ousting Charney
American Apparel has updated its code of ethics less than a month after firing controversial CEO Dov Charney — a move that could help improve the apparel chain’s tattered reputation as it considers a possible sale, or a turnaround.
The updated policy wasn’t exactly a surprise: American Apparel (APP) in a regulatory filing last month said it would replace its prior code of ethics by Jan. 1 (it appears it slightly missed that deadline). In a Securities and Exchange Commission filing, the company said the revised code was intended to “clarify, update, or enhance the descriptions of the standards of conduct that were expected of all directors, officers and employees of the company.”
The policy details appear pretty standard, touting American Apparel as an equal opportunity employer, requiring respectful conduct free of harassment, and proclaiming that no management-level employee may make sexual advances toward any subordinate, among many other policies. The new code is about 6,200 words long, and more than four times as long as its predecessor, according to Bloomberg.
But the chain had a history of lawsuits when it was run by Charney, who stayed on to run the company for years even after lawsuits were filed in New York and California, alleging sexual harassment, assault and battery, defamation, and other related claims. American Apparel and some of the board of directors were also named in those suits. The company has since said that it settled, or obtained a dismissal of all but one of those claims.
The struggling retail chain, known for its racy ads, is now being steered by fashion veteran Paula Schneider. Schneider could potentially be positioning American Apparel for a sale, although her public comments have suggested she knows there is first work to do to re-establish the brand.
“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,” Schneider said when she was named CEO last month.
She has her work cut out for her. American Apparel has reported four years of annual losses, despite an increase in sales over that period. The company is poised to report a fifth annual loss for 2014, losing $40.9 million for the first nine months of the year.