American Apparel Officially Fires Founder Dov Charney, Hires Its First Female CEO

Guest Writer
2 min read
Opinions expressed by Entrepreneur contributors are their own.

For the past six-months, Dov Charney has only been tangentially tied to the company he founded 25 years ago. In June, Charney was suspended as American Apparel's CEO after the company alleged he had misused corporate funds, although he remained a consultant to the company.

His run with American Apparel is officially over. The company announced yesterday that it had severed ties with Charney, ending his role as a consultant and hiring Paula Schnieder as its new CEO. Schnieder is a long-time fashion industry player, with a resume that includes executive stints at BCBG Max Azria, and Laundry by Shelli Segal.

While Charney's suspension stemmed from an internal investigation that found he had been mishandling funds, his entire run at American Apparel was riddled with controversy. Harassment charges plagued Charney throughout his tenure as CEO -- there were multiple accounts of sexual harassment from female employees, and one male employee accused the then-CEO of choking him and rubbing dirt in his face.

Related: Lululemon Founder Won't Go Down Without a Fight

Initially, after being removed as CEO, it appeared that Charney wasn't going to leave without a fight. He threatened to sue if he wasn't reinstated, and indicated that as the company’s largest shareholder (he now owns a 43 percent stake) he might wage a proxy battle for control of the company.

It appears his retaliatory drive has simmered, at least for now. "I'm proud of what I created at American Apparel and am confident that, as its largest shareholder, I will have a strong relationship with the company in the years ahead," Charney said in a statement provided to The New York Times.

Charney founded American Apparel in 1998, which went public in 2007. While the company experienced widespread popularity in the years leading up the financial crisis, more recently it has racked up a heavy debt-load. Last quarter, the company reported that its loss widened as same-store sales declined 7 percent.

The stock is now trading at $0.65, up about 13 percent since market open, although it's still down 47.18 percent this year to date.

Related: How RadiumOne Did the Right Thing in Firing Its CEO

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Starting, buying, or growing your small business shouldn’t be hard. Guidant Financial works to make financing easy for current and aspiring small business owners by providing custom funding solutions, financing education, and more.

Latest on Entrepreneur

Entrepreneur Media, Inc. values your privacy. In order to understand how people use our site generally, and to create more valuable experiences for you, we may collect data about your use of this site (both directly and through our partners). By continuing to use this site, you are agreeing to the use of that data. For more information on our data policies, please visit our Privacy Policy.