American Apparel sales fall: Dov Charney wars with current management over fate of the company.

American Apparel Wants to Keep Out Its Sleazy Former CEO. Tanking Sales Aren’t Helping.

American Apparel Wants to Keep Out Its Sleazy Former CEO. Tanking Sales Aren’t Helping.

Moneybox
A blog about business and economics.
April 6 2015 6:26 PM

American Apparel Wants to Keep Out Its Sleazy Former CEO. Tanking Sales Aren’t Helping.

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Classic American Apparel.

Photo by Spencer Platt/Getty Images

American Apparel has become the subject of a fierce power struggle between its founder and former CEO, Dov Charney, and its current management. Charney—the man who built American Apparel’s fashion-forward, made-in-the-USA, somewhat sleazy image—was fired last summer after his exploits led to multiple sexual harassment allegations from employees (and as the company’s stock tumbled into penny territory). But true to character, Charney hasn’t gone quietly, and lately he’s spent a good amount of time attempting to stir up a worker revolt against American Apparel and its new leadership.

Now, BuzzFeed has obtained and published new internal documents showing that amid the managerial drama, American Apparel’s sales are tumbling. Sales were down nearly 11 percent as of March 31 versus the same period a year earlier. And in some of the retailer’s biggest markets—Chicago, Los Angeles, and New York—the drop-offs were greater than 15 percent. From BuzzFeed:

The dire figures are fueling the already bitter feud between founder Dov Charney, who was fired last year, and the hedge-fund-backed management which now runs the company. The collapsing sales are also spreading fear among the company’s garment workers who, almost uniquely in the fashion business, still work in the United States, in its downtown Los Angeles factory.
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Alienating workers is not something American Apparel can really afford right now. Just last week, American Apparel CEO Paula Schneider said the company would lay off about 180 employees in an “ongoing process” to streamline operations and reduce costs. Schneider’s handling of the news drew flack from some employees, as she reportedly alerted the New York Times to the cuts before telling all affected staff. Charney, for his part, has seized upon apparent flaws in Schneider’s stewardship to rile up his former workers. He plans to file a lawsuit seeking $40 million in damages and is encouraging American Apparel workers to organize. The company’s weak sales figures will just add more fuel to that fire.

Alison Griswold is a Slate staff writer covering business and economics.