Rude Awakening: The Rise and Fall of American Apparel’s Dov Charney

The Jewish-Canadian businessman has been fired from the company he founded in the 1980s. Despite a string of sexual harassment allegations against him, it seems Charney’s ouster was business-related.

Bloomberg

Dov Charney, the founder and CEO of American Apparel, has quite a lengthy list of achievements. As the creator of the famous “Made in the USA” logo, he can take credit for encouraging local manufacturing long before everyone discovered the slogan.

Charney championed employee rights, challenged the conservative taste of many people in America and worldwide, promoted sensitive issues such as older models and the LGBT struggle. And, of course, at the same time he created a fashion empire.

Despite all that, last month the members of the firm’s board of directors decided to oust him from the company that he’d created in his image. It soon transpired that Charney is, first and foremost, a victim of his own behavior, and the question is not why he fell – but why now of all times.

Charney was born in 1969, to a Jewish family from Montreal. His mother is an artist and his father an architect. He said that his parents were products of the 1960s, the decade of student rebellions in the United States.

He himself began American Studies at Tufts University, near Boston, but didn’t finish. Instead, he began to print the university logo on T-shirts, started a company and embarked on a short-lived partnership with a shirt distributor.

In the beginning, the company – which was named American Apparel – sold its products in Canada. Only in 1989 did he begin to manufacturer Hanes T-shirts himself. His first 1,000 shirts were manufactured in South Carolina, and soon he also moved there, in order to develop the company and gain expertise in the weaving of cotton fabrics – which today are synonymous with the company.

American Apparel advertisement.
American Apparel advertisement.

In 1995, Charney expanded the company’s offerings and began to design women’s shirts. In 1997, he moved to Los Angeles and opened a plant in cooperation with local manufacturers, most of them Koreans.

Then he became a rising star, and positive articles about the firm were published in magazines such as The New Yorker, boosting his success. In 2003, American Apparel opened its first brand-name stores, which were an immediate hit. Today, American Apparel is an empire that includes 250 stores in 20 countries.

There is no question that the company owes its success largely to hipsters. With its effortless chic and appearance of simplicity, the brand identified itself with them from the start, and became a synonym for this style and the city in which it developed, New York.

But it wasn’t only the clothes that made the brand. Just as important was the free spirit and sexual liberation it broadcast. The company’s campaigns, ads, show windows, branding – all exuded sex (some say pornography).

The simple Polaroid photos at the center of many American Apparel campaigns starred men and women (most of them not professional models) in sexual positions, barely clothed, in an unphotoshopped, “natural” look, which included scars, injuries and tattoos.

Young girls in sexually arousing positions, naked porno actresses wearing only the firm’s socks, Hasids, dogs, older women (accompanied by the slogan “Sexy has no expiration date”), a bare-breasted company employee with the slogan “Made in Bangladesh,” Charney himself sitting on a bed with two of his creative directors and the slogan “In Bed with the Boss” – all these campaigns were loaded with sociocultural messages, but always under a heavy cover of sexuality. Even the T-shirts were no exception, and some bore provocative prints. One of them, with drawings of a vagina, caused a major scandal.

American Apparel advertisement.
American Apparel advertisement.

It seemed that the company’s branding was based entirely on the personality of Charney, who was known for wild, hypersexual and provocative behavior.

But the desire to challenge the consensus and conservative beliefs was not the only definition of Charney’s behavior. Many people actually considered it genuine sexual harassment.

Back in 2004, the magazine Jane published an article in which Charney was presented as a sexually harassing boss, and the female reporter described how she was forced to watch one of his female employees administering oral sex to him during the interview.

In 2005, three of his female employees filed lawsuits for sexual harassment and described the work environment as a place where they were exposed to Charney’s improper behavior and his objectionable sexual innuendos.

A year later, another female employee filed a complaint about being fired in the wake of sexual harassment. In 2008, Charney was accused of turning an underaged employee into a “sex slave,” and in 2011 another five employees sued him for sexual harassment. In 2012, he was accused of improper behavior after trying to choke the manager of his store in Malibu.

All that time there were rumors about his homophobic remarks and improper behavior in the company’s offices, where he used to work wearing only underpants. Most of the complaints and lawsuits were settled out of court; some are still awaiting the court’s decision.

American Apparel advertisement.
American Apparel advertisement.

Despite the growing stream of accusations, American Apparel’s board of directors waited a long time before deciding to oust the company CEO and founder.

So why now of all times? Apparently the board’s decision was more of a business necessity than a moral decision. “We take no joy in this, but the board felt it was the right thing to do. 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,” said Allan Mayer, who has been on the board since 2007 and takes over as cochairman. But, in fact, the company not only grew, it also began to collapse.

During the past five years, American Apparel’s financial situation has been steadily deteriorating. In 2009, Charney was forced to dismiss 1,800 employees after the immigration authorities caught them without U.S. residence permits. Hundreds of others left voluntarily, and the large-scale abandonment harmed the company’s production capacity that year.

Last year, American Apparel’s accounting firm ditched it, and the reason for the move led the Justice Department and the Securities and Exchange Commission to begin investigating. And after the company announced that it was on the verge of bankruptcy in 2010, shareholders sued in class actions for faulty management. As a result, there was a drop of over 80 percent in the share price during those five years.

Will Charney’s ouster help the company recover, or just the opposite? After all, the company was created in his spirit, and, as Ilse Metchek, the president of the California Fashion Association, put it, “What is American Apparel without sex? It’s a T-shirt and sweatshirt company.”

What remains to be seen, therefore, is whether even without the objectionable sexual behavior, the sexual provocations and the blatant campaigns, the company will continue to be a desirable brand or become just another T-shirt and sweatshirt chain.