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American Apparel Hires New CEO, Terminates Charney

As first reported in a Breaking News Alert on Tuesday, Top 40 supplier American Apparel (asi/35297) has hired veteran fashion executive Paula Schneider as its CEO.

As first reported in a Breaking News Alert on Tuesday, Top 40 supplier American Apparel (asi/35297) has hired veteran fashion executive Paula Schneider as its CEO. The move is effective as of January 5, and the announcement of Schneider’s appointment came on the same day that the company said it has officially parted ways with founder and former CEO Dov Charney. Charney had been operating as a consultant for American Apparel since June, after he was ousted by the company’s board of directors from his role as CEO for alleged misconduct and violations of company policy. American Apparel then launched an independent investigation into Charney’s actions that was conducted by FTI Consulting.

“Based on this investigation, the special committee determined that it would not be appropriate for Mr. Charney to be reinstated as CEO or an officer or employee of the company,” American Apparel said in a statement. “While under suspension as CEO, Mr. Charney had been serving as a consultant to the company. This relationship has now been terminated.”

Charney remains, though, a large stakeholder in American Apparel, after he came together with equity firm Standard General this summer to acquire more than 40% of the company’s shares. “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. “Naturally, I am disappointed with the circumstances and my over 25 years of deep passion and commitment for American Apparel will always be the core DNA of the company. I wish the company continued success.”

Since Charney’s dismissal this week, a group of managers and director-level employees currently working for American Apparel sent a letter to the company’s board of directors that protested the decision to officially fire Charney. “We believe the best-case scenario for the future of American Apparel is to put a strong CEO in place that can focus on structure, efficiency and optimization of the daily operations of the business,” said the employees in the letter, which was first reported on by Bloomberg News. “The CEO would be a supportive counterpart to Dov, who we feel should lead the creative vision, growth and sales strategy of the company.”

Schneider, who will be American Apparel’s first female CEO, comes to the company with extensive executive experience at fashion and retail companies. She has served as president or senior officer of Warnaco, Gores Group, BCBG Max Azria, and Laundry by Shelli Segal. “American Apparel has a unique and incredible story, and it’s exciting to become part of such an iconic brand,” Schneider said. “My goal is to make American Apparel a better company, while staying true to its core values of quality and creativity and preserving its sweatshop-free, Made in USA manufacturing philosophy.”

The appointment of Schneider and the cutting of ties with Charney ends a busy time for American Apparel. After it initially suspended Charney in June from his role as president and CEO, the company went through a change to its board of directors, and Standard General engineered deals to effectively take over ownership of the company. In late September, American Apparel then named Scott Brubaker as its interim CEO.

“This company needs a permanent CEO who can bring stability and strong leadership in this time of transition, and we believe Ms. Schneider fits the bill perfectly,” said David Danziger, co-chairman of the board. “We remain grateful to Scott Brubaker for his hard work and invaluable insights towards improving our operations.”

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 the previous year.