American Apparel founder ousted amid inquiry
The board of American Apparel, a fashionable clothier with racy advertising, has moved to oust the company's controversial founder.
In a statement late Wednesday, the retailer said that its board had voted to fire the founder, Dov Charney, as chief executive. Under the terms of his contract, he will be suspended immediately and formally terminated after 30 days. The directors have also voted to remove him as chairman.
According to one company director, Allan Mayer, the move was made amid a continuing investigation. It follows years of controversy that have troubled Charney, including several cases of sexual harassment.
The decision also comes after years of financial underperformance, including times when the company needed rescue financing to stay afloat. Shares in the retailer have fallen 84 percent during the past five years, to 64 cents as of Wednesday's close.
American Apparel's chief financial officer, John Luttrell, was installed as interim chief executive. And two directors, Mayer and David Danziger, will become co-chairmen of the board.
"We take no joy in this, but the board felt that it was the right thing to do," Mayer said in a statement. "Dov Charney created American Apparel, but the company has grown much larger than any one individual, and we are confident that its greatest days are still ahead."
American Apparel added that it believed replacing Charney as chief executive may have triggered a default under some of its agreements with creditors and will try to renegotiate with them.