Report: Charney Could Stay At American Apparel
Stock Climbs After News
The board of directors at Top 40 supplier American Apparel (asi/35297) is increasingly open to keeping embattled former CEO Dov Charney at the firm, according to a report by Bloomberg. Currently, Charney is serving as a consultant to the Los Angeles-based manufacturer, but the board could offer him a new role, the report said. The Bloomberg story sent American Apparel’s (NYSE: APP) stock immediately higher – up 2.4% in extended trading late Tuesday – although the price has since retreated.
The news from Bloomberg continues an already busy week of headlines from American Apparel. On Monday, the firm named Scott Brubaker – noted for his company turnaround skills – as its interim CEO, replacing John Luttrell. No reason was given for the departure of Luttrell, who took over after Charney’s dismissal this summer. American Apparel’s board forced Charney out in June over alleged misconduct – since, the company has been conducting an internal investigation to determine Charney’s future at the firm. Charney has repeatedly denied any wrongdoing.
The moves this week were the first officer appointments the company has made since being effectively taken over by equity firm Standard General in July. That month, Charney teamed with Standard General, raising his stake in American Apparel to 43%. Shortly after, Standard General gained control of Charney’s entire stake after Charney transferred it to equity firm as collateral for a loan. The hedge fund has worked to remake the clothing company’s board and give American Apparel a path to profitability.
American Apparel ranks as the 14th-largest supplier in the industry, after reporting 2013 North American ad specialty sales of $99.2 million, a 2.5% increase over 2012.