The calls intensified last week for Dov Charney to step aside as chief executive of American Apparel.
That’s nothing new. (Even I opined in late 2008 that Charney should become chief creative officer or some such, and turn over the CEO duties to an experienced hand.) What’s new is that virtually every analyst and stockholder now is screaming it.
On the face of it, such calls make sense. Charney’s stewardship of the clothing company in recent years could be characterized as dismal. American Apparel has been criticized for its provocative ads and Charney is forever branded as a one-man generator of sexual harassment lawsuits. The company’s financials have long been shaky. It suffered after a crackdown from immigration officials last year and its accounting firm resigned last month in such a manner as to make that red flag a bright one. But last week’s announcements were maybe the grimmest yet: Sales are slumping, losses are expected, a looming debt may not get paid and the company’s status as a going concern is officially up in the air. Shares last week crashed into penny stock territory as equity owners fear a haircut in a bankruptcy court.
Since all that happened on Charney’s watch, the opinion among many professionals is that it’s time – maybe past time – to let a turnaround expert take command.
But before Charney gets poked aside by all those folks with torches and pitchforks, let’s take a moment and think about that.
Look at what he has done for the company. For one, starting from zero, he created a sizable enterprise – 10,000 employees and 280 stores (albeit shrinking) in 20 countries. He took his vision and relentlessly pushed his concept through his ADD-like workaholic devotion. Charney has the rare talent to design clothes that are fashionable yet classic; they don’t quickly go out of style. And the clothing is durable and reasonably priced.
What’s more, he may be one of American’s sharpest marketers. Admit it. Those provocative ads – many of which were created and photographed by Charney – you may love or hate but you must pay attention to them.
The result of all this: Most everyone knows about American Apparel. The company has an image of being sexy, hip and reliably outrageous.
He’s also made some noteworthy decisions. He famously put health clinics in his plant for his mostly immigrant employees, and he has not offshored his production (his big factory remains near downtown Los Angeles). As a result, he can say American Apparel is the largest apparel company still manufacturing in America.
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