Dov Charney selfie with factory employee (Source: Dov Charney’s flickr page)
Will Dov Charney finally have his revenge on American Apparel?
A bankruptcy court judge’s recent approval of American Apparel’s reorganization plan over a $300 million bid by another group of investors led by Dov Charney does not appear to be the end of the fight between the retailer and its founder and former CEO. According to reports, Mr. Charney and the same investors that backed him in his attempt to retake American Apparel are creating a new, rival company.
The new company will produce a line of clothing basics, such as underwear and t-shirts manufactured in the U.S. Ã la American Apparel. It will initially focus on being a wholesaler, with a “robust e-commerce system,” but not simply be an e-tail operation.
Chad Hagan, managing partner and group president of Hagan Capital Group, told Women’s Wear Daily, “We don’t want to just start with some funny, online brand.” He said his firm and fellow investor Silver Creek Capital Partners fully support Mr. Charney, whom he described as a “colorful CEO.”
Mr. Charney’s critics typically refer to him using terms such as “creepy”. He was fired for cause from his job as CEO of American Apparel in 2014 for a variety of alleged infractions, including the misuse of company funds, releasing naked photos of a former employee who was suing him, as well as ongoing inappropriate, if not illegal, behavior with female workers. Mr. Charney, it has been alleged, danced around the company’s office in his underwear on at least one occasion.
- American Apparel Rival Led by Dov Charney in Works – Women’s Wear Daily (sub. required)
- American Apparel Founder Dov Charney Is Plotting a Comeback – Fortune
- Dov Charney Can’t Get American Apparel Back, So He’s Starting a New Brand That’s Basically the Same Thing – Complex
- American Apparel CEO to fight firing – RetailWire
Discussion Questions
Which company do you think will be in a better position to succeed — American Apparel coming out of bankruptcy or a rival company led by Dov Charney? If you were an investor, would you be willing to risk millions on the “colorful” Mr. Charney?
Poll
BrainTrust
Martin Mehalchin
Managing Director, Retail and Consumer, PK
Ed Rosenbaum
CEO, The Customer Service Rainmaker, Rainmaker Solutions
Two things:
Judging from the lack of comments, no one wants to touch this with a ten foot pole.
Obviously the whole thing is an ugly mess and both American Apparel and any new venture from Charney face long odds. American Apparel first got my attention because of their vertically integrated manufacturing in Los Angeles and their bold positions on worker and immigrant rights. It’s a shame that those aspects of the story were blown away by reckless executive behavior and the ensuing controversy.
Sometimes it is better to cut your losses and let your ego heal itself.
The landscape is replete with ousted founder/CEOs who attempt to lead a second act comeback. Some are successful, others not so much. George Zimmer with zTailors, Richard Thalheimer with RichardSolo.com … the list goes on. The point is that each of these folks got to the level of success they did by having the instincts, drive and timing to make it a success. It’s sometimes hard to replicate that, but if you are good at something, why not try?
Putting aside Mr. Charney’s alleged colorful behavior (and that is sooooo hard to do, believe me, I know), you can’t fault him for the drive and determination he’s shown in fighting this. He’s managed to get 2 investors to back him, so he’s, if nothing else, a great salesman. I am fascinated by his doggedness here, and hope to see his 2nd act a success.
Let’s go beyond Mr. Charney’s persona: did the concept — American made apparel at competitive prices — really ever work? It seems like the answer was ultimately “no”… it could be a high(er) priced niche brand for people who wanted/insisted on domestically made clothes, perhaps, but there’s no certainty there’re enough of them for AA to amount to much.
American Apparel is already established and coming out of bankruptcy, with the right management team in place, has the ability to thrive and grow. Dov Charney has the potential to compete with it, but this will require much money and time, and investor patience, before any level of similar success would be realized. I wouldn’t risk my monies on Charney in this scenario, since he is part of the reason that the original bankruptcy was created.