The Business On... Dov Charney, CEO, American Apparel


What is he accused of now?

No, no, that isn't why he's in the news now. You are right that the eccentric clothier has attracted his share of lurid allegations. Perhaps you're thinking of the claims he beds his models, cavorts round the American Apparel factory in his underpants, puts underage-looking girls in provocative poses in company ads... We could go on.



Go on.

Accusations of discriminatory hiring policies. His reference to his models as "sluts". How he defended himself by saying: "Some of us love sluts." Can we stop now?



OK, so why is he in the news?

The business has taken a terrible turn, and without the forbearance of its lenders American Apparel could be bust by the end of next month.



Yikes. Wasn't American Apparel a great business success story?

It was. From humble beginnings as an entrepreneurial teenager importing T-shirts into Montreal, Mr Charney created an international chain of 280 stores. The slightly sleazy image only added to the allure of its brightly coloured wardrobe staples.



And now?

Sales are slumping – down 16 per cent, we learnt yesterday – and its debts are mounting. Worse, its auditors, Deloitte, walked out in July in a row over how to value the stores, and the company is so far behind in filing its accounts it could be thrown off the New York Stock Exchange.



Is Mr Charney chastened?

He blames a police raid on the company's Los Angeles factory last year, which discovered one in three of its staff was in the US illegally. Replacing them has caused massive disruption. Mr Charney has just stepped up American Apparel's campaign for an amnesty for illegals, under the slogan: "Legalise LA".



That's a neat line, but surely not enough to placate the financiers?

Undoubtedly, no. Maybe Mr Charney can see a way through this crisis that doesn't end with him losing majority control of the firm. If so, he is the only one who can.

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