THE AMERICAN APPAREL TURNAROUND: From Sex Slaves, To Slump, To Sales Success (APP)

Dov Charney

Last month American Apparel announced a quarterly net loss of $7.9 million. For most companies, posting a ninth straight quarter of losses wouldn't be cause for celebration. But things are different at American Apparel, the company known to have girls in bikinis wash its roof.

In the past 12 months, American Apparel, led by founder Dov Charney, has undergone a wrenching series of changes to get the all-American clothing house, one of fashion's most prominent advertisers, back on the right track.

American Apparel is known for sexy clothes, sexy ads and lawsuits alleging sexual harassment. But sales are on the increase, its retail footprint is being rationalized, and its wholesale and internet businesses are booming.

If Charney can pull this off—the company is still in the red, so it's not guaranteed—it will be one the most epic turnarounds in fashion retail history.

Here's how American Apparel has gone from rambunctious teenager to mature adult, accompanied by a history of the ads that made the store infamous.

In the beginning ...

American Apparel was started by Dov Charney while he attended Tufts in the late 1980s.

By 1997, the company moved from Charleston, South Carolina, to Los Angeles. In 2000, American Apparel moved into its current Los Angeles factory.

The business originally focused on T-shirts, allegedly inspired by one of Dov's ex-girlfriends.

In 2006, the company was sold for more than $380 million to Endeavor Acquisition Corporation.

Charney stayed on and still runs the company today.

In 2004, concerns about the sexual nature of AA's corporate culture emerged.

Charney gave an infamous interview with Claudine Ko, which became a relatively unedited article looking into the company, Charney and the women around him.

Ko claimed Charney masturbated in front of her — multiple times.

What followed were a series of lawsuits from former employees, now totaling nine, regarding sexual harassment, naked pictures, etc. In one of them, filed in 2011, a woman alleged Charney trapped her in his home as a sex slave.

But in the mid-2000s, sales were booming.

2008 was a very good year, until ...

... Charney called his CFO a "complete loser."

Ken Cieply resigned a few weeks later and the stock had one of its worst months in history. It would get temporary reprieve, but then suffer with the rest of the markets in the fall of that year.

By December there were still reasons to celebrate a bit: rapid expansion, success in the U.K., domestic praise, and a great online strategy

See the rest of the story at Business Insider

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