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

Six months after suspending him for alleged sexual misconduct, American Apparel pulls the trigger and cuts ties with its controversial founder.

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By Laura Entis

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

Laura Entis
Laura Entis is a reporter for's Venture section.

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