Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Last Stand at American Apparel Add to ...

Dov Charney was born for the "Yiddish hustle," as he's fond of saying, and when he's practising the art form, he can be convincing. "I love the company, there are loyal customers and employees that are a great part of it, and I naturally have a very high level of confidence in our long-term viability," he tells me about American Apparel in the early fall, despite pressing evidence that his business is sinking.

More related to this story

Successful salesmanship, of course, requires innate conviction. This scrappy, wiry cool kid from Montreal, now 41 and looking firmly middle-aged, is, if anything, a believer in his own rather unique vision.

As the garment trade's proto-hipster hustler, and American Apparel's founder and chief executive, Charney seems to fuse his entire energetic persona to his brand. He is an incendiary marketer. He is untamable-bold, showy and brutally frank about everything that defines him, whether it's the crotch-shot emphasis of his advertising or an erstwhile habit of calling women "sluts."

Everything to do with his vision-how Charney articulates it, sells it and builds on it-has been a knot of contradictions. On one hand, he is the controversy-prone CEO of a public company, a man accused of sexual harassment and portrayed in the press as both pervy and a micromanager, so looks-obsessed that he even demands his retail staff groom their eyebrows a certain way.

Then there is the other Dov, the brilliant creative force whose anti-sweatshop and pro-labour practices at American Apparel's Los Angeles factory have made him an unlikely hero in a politically charged battle to legitimize undocumented workers in the United States.

Critics add to the man's litany of opposites. His brand is both this and that, a hyper-sexed retailer...that also carries Sesame Street gear for toddlers. All of this, of course, has made Charney a star, a "what will he do next?" character in the buttoned-up world of business. Hardly anyone in charge of a high-profile concern will actually dare peek out of their Brooks Brothers closet-at least not without a force of media trainers preparing an advance-and yet there Charney is, the chief exhibitionist officer romping around in pink American Apparel underwear.

There is something to be said for Charney's approach. Most corporate chiefs will do anything to cover up their peccadilloes, but Charney, guilt-free, lets it all hang out. (He describes AA's culture to me as one of "openness," attributing this to the "California influence.") And for years, he's been so colourful and infuriating that those qualities alone seem to have elevated his company's profile and his own celebrity.

Then, this summer, the dazzling high-wire-while-fire-juggling act came crashing down. AA's auditors, Deloitte & Touche, resigned. The company was in danger of being delisted from the New York Stock Exchange for not submitting a quarterly earnings report on time. (It now has until Nov. 15 to make the filing.) Suits piled up from law firms representing some of AA's investors, who are riled up over its use of illegal workers, its declining revenue and its escalating debts. Most threatening of all, the company fell in danger of breaching covenants for an $80-million loan from the significant debtholder in this drama, British-based Lion Capital, a private-equity firm (all currency in U.S. dollars unless otherwise noted).

Suddenly, Charney's antics weren't so funny any more. He may hold 53% of American Apparel's shares, but that's hardly a guarantee of security: He's the guy who was in charge as the company amassed more than $120 million in debt, in part by expanding briskly and failing to scale back enough in the recession. (The company currently has 10,000 employees and more than 280 retail outlets in 20 countries.)

And yet, only a few weeks after American Apparel issued a statement warning there is "substantial doubt that we will be able to continue as a going concern," Charney is buoyant and garrulous. "We're in the early stage of our development," he tells me. True enough: American Apparel has only been retailing since 2003. "There's a lot of maturing that's going to take place in terms of the customer's understanding of who we are and our own ability to operate in a fully efficient manner."

Of course, one strategy for a salesman is: Never give up the sell, not until you take your last breath.







There is no army of handlers standing sentinel for Dov Charney. If you call the number listed for American Apparel's CEO, it goes right to Charney himself. In fact, he calls me just hours after I send an e-mail to an address I assume belongs to the first gatekeeper of many.

Single page

Follow us on Twitter: @GlobeBusiness

 

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular