Sexual harassment may be the primary reason behind American Apparel's (AMEX: APP) firing of chairman, president and CEO Dov Charney.
American Apparel late Wednesday suspended – and says it plans to fire – Charney over alleged misconduct. The decision to oust Charney "grew out of an ongoing investigation into alleged misconduct," Allan Mayer, who has served as lead independent director for the past three years, said in a statement.
According to Huffington Post, several former employees have sued Charney over sexual harassment and other types of harassment. The former CEO also has a reputation for lewd behavior.
However – more importantly – Charney hasn't performed well as a CEO, according to Brian Sozzi, chief equities analyst at Belus Capital Advisors.
The retailer hasn't posted an annual profit since 2009 and has racked up $270 million in losses since the beginning of 2010. American Apparel has been saddled with long-term debt, which jumped to $246.9 million in the nine months ending Sept. 30, FierceRetail reported in a previous story. The retailer has also come close to breaching loan covenants, debt terms designed to protect its lenders, in recent quarters.
Meanwhile, American Apparel's largest outside investor said he expects Charney to fight the company over his firing, which may be the prelude to a sale of the company.
"Dov is going to fight very hard. I think he will do a counterattack. I don't think he will give up his dream," Johannes Minho Roth, who runs the Swiss investment firm FiveT Capital AG, told Bloomberg.
American Apparel firing CEO over misconduct
Kmart, Sears, American Apparel voted least engaging brands
American Apparel seeks restructuring advice as it struggles with massive debt
American Apparel CEO: We pay workers $2,000 per month, and H&M can't pay $50?
Lousy looking apps cost retailers a lot of money