When Dov Charney’s mother called to check on him recently, she told the American Apparel Inc. chief something he needed to hear: that he’s a survivor.
The flamboyant founder of the hip apparel chain has weathered all sorts of challenges over the past few years, including a government audit that ultimately caused American Apparel to lose 2,500 immigrant workers.
But perhaps nothing quite like last week, when media reports suggested that the company was on its last legs and searching for as little as $5 million to stave off bankruptcy.
“American Apparel Really Might Go Bankrupt This Time” was the breathless headline on the Huffington Post. Even ABC morning anchor George Stephanopoulos called asking if he had time for an interview.
In the midst of it all, Charney sat down with the Business Journal to defend his company, his handling of recent events and his turnaround plans.
“I feel I’ve reached a level of personal maturity,” he said, “whereby in order to take this to the next level, I need to surround myself with people who are better than me in the fields that they operate.”
Known for its basic T-shirts and hipster clothes, American Apparel is struggling to recover from the recession, deal with rising raw materials costs, and hire and train replacement workers.
But it also has been hinted that Charney may no longer have his finger on the pulse of fashion.
This much is certain, Bank of America and Bank of Montreal have given the company until April 30 to prove it’s able to continue operating or they could call in their balances on American Apparel’s revolving credit facilities, which so far have been drawn down by $57.4 million.
The company said in regulatory filings that it may have to file for bankruptcy if business doesn’t improve, even though in his interview Charney said rising sales could change everything.
The turbulence is reflected in a stock price that at its height hit $15.80 in 2007, but hovered at 80 cents last week.
On top of it all, Charney has had to deal with the fallout from additional sexual harassment lawsuits, the most recent from yet another young former employee. She appeared on the “Today” show in late March to accuse the American Apparel chief of physically attacking her.
Charney was unrelenting in his defense of himself and his company during the interview, aside from acknowledging a lack of experience running a public company. (He eventually heeded calls for a change in management, hiring a team of veteran executives.)
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