American Apparel’s brand promise was a unique mix of “clothes made in the USA” and porn. The company alleged it manufactured things in a responsible way. (Mass layoffs earlier this year of the illegal workers who made their product in the USA did away with that one.) AmAp’s approach to marketing is best described as an NC17 version of “nothing comes between me and my Calvin’s.”
For most businesses this would have just been another horrid example of sex sells. For AmAp it seems to have been a reflection of CEO Dov Charney’s “issues.” Charney, who took most of the pictures of company employees used in the ads, was the defendant in so many sex-harassment law suits that you couldn’t keep track of them.The wonderful practices didn’t stop there – no surprise. AmAp was also accused of firing employees who weren’t attractive enough and, Gawker reported that,
Charney "made store managers across the country take group photos of their employees so that he could personally judge people based on looks. He is tightening the AA ‘aesthetic,’ and anyone that he deems not good-looking enough to work there, is encouraged to be fired."
Happily Charney’s management style seems to have come back and bitten him in the ass. Today the Times reported that the company’s woes continued as it raised "substantial" doubt about its ability to continue as a going concern and warned it could breach a loan covenant, sending its shares down 22 percent to a lifetime low. This follows a Federal inquiry into AmAp finances which was spurred when the company’s auditor quit after warning of problems with the company’s financial reporting and the reliability of the company’s financial statement for ‘09.
BTW, Charney is the company’s largest shareholder. Huzzah. Justice, oddly enough, is served.