American Apparel fires founder Dov Charney

Fashion executive Paula Schneider will take the helm after board concluded Charney violated company policy in internal investigation

Way out: American Apparel founder Dov Charney (Getty)

American Apparel has fired controversial founder Dov Charney and hired its first female chief executive to run the retailer known for its hyper sexualised image.

On Tuesday, the board said it had terminated Charney's position "for cause" following an investigation into misconduct. He will be replaced by well-known fashion executive Paula Schneider in the new year.

Charney was ousted as chief executive by the company's board in June citing allegations of misconduct, but still kept his job as a consultant to the company. The 45-year old Canadian founded American Apparel in 1998 and promoted the retailer as a "no sweatshop, Made in America" brand.

However, he had come under intense scrutiny following a string of sexual harassment lawsuits brought forward by former employees - all of which were either settled or dismissed. Charney himself admitted he had intimate relationships with employees, but insisted they were consensual.

American Apparel has operated under two interim CEOs since Charney's ouster, most recently Scott Brubaker, who will continue in that role through the end of the year until Schneider takes over on 5 January.