American Apparel founder Dov Charney was fired yesterday from his position as chairman and suspended from his roles as president and chief executive of the fashion firm following repeated misconduct allegations.
The Los Angeles-based fashion chain, known for its popular clothing and risque advertising, took the action following years of allegations of sexual misconduct against Charney, which he has always denied.
The company has also suffered a major downturn in fortunes in recent years, with shares falling from a high at the end of 2007 of $15.02 to only $0.64 recently, though closed up 6.72 per cent yesterday to finish at $0.68.
The board of American Apparel announced it would be appointing John Luttrell as interim CEO, while Allan Mayer and David Danziger were appointed co-chairmen to replace Charney.
Luttrell said that after Charney’s departure the company would “remain committed to its sweatshop-free, Made in USA manufacturing philosophy”.
As a result of the management changes, the company might have been deemed to have triggered a default under its credit agreements, as it stated it would be in discussions with its lenders for a waiver of the default.