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How American is American Apparel?


CEO Charney has Canadian passport, extraordinary business acumen and social grace of subway flasher.


American Apparel
(APP) operates nearly 200 stores around the world, and Montreal-born founder and CEO Dov Charney is enjoying his company's success. "It's sickening money, man," he told (he's 39). "We're minting money."

On a May 13th conference call, Charney said first-quarter sales were at $111.6 million, up 52% from the previous year. Interesting, considering that American Apparel manufactures their goods exclusively in the United States - unlike most U.S. companies.

Analysts' questions about those results went unanswered, however, due to the fact that CFO Ken Cieply had resigned to explore "other opportunities" after Charney called him a "complete loser" in the Wall Street Journal.

But Charney was happy to discuss American Apparel's business forecast for the coming year during a face-to-face interview with Claudine Ko from the now-defunct Jane magazine - but only while masturbating. The writer also reported that Charney demanded, and received, oral sex from an employee while she looked on.

Not altogether surprisingly, Charney is now facing his fifth lawsuit in three years: Jeneleen Floyd, who worked in the product-placement department at the firm's Los Angeles headquarters, alleges that Charney stormed into her office and demanded that she pretend to masturbate for him. When she refused, a (male) colleague happily complied; not to be outdone, Charney joined him.

Another lawsuit has been brought by Mary Nelson, a wholesale salesperson who was fired after she complained about the inappropriately sexual atmosphere in the American Apparel office. In a deposition, her lawyer, Keith Fink, had the following exchange with Charney:

Fink: Did you ever, at work, refer to women as "sluts?"

Charney: In private conversations, where such language was generally welcome.

Fink: Do you view "slut" to be a derogatory term?

Charney: You know, there are some of us that love sluts. You know, it's not necessarily - it could also be an endearing term.

"I want to be remembered as one of the great CEOs of our time and of my generation," Charney has said - and indeed, Lazard Capital Markets (LAZ) analyst Todd Slater believes American Apparel has the strongest sales trends in the industry, giving the stock a buy rating and a $17 price target.

Charney, however, isn't your typical CEO. General Electric (GE) chief Jeff Immelt, for example, is not known to have remarked to "People think because I talk about hot ass that I'm some sort of pervert."

It would surprise me if Verizon (VZ) CEO Ivan Seidenberg were quoted in the Wall Street Journal as saying, "If you're offended by sexual innuendo or masturbation or sexual coloring books - if you're offended by any of these, then don't work here."

I also can't quite picture Apple (AAPL) CEO Steve Jobs offering such pithy cultural commentary as this to the aforementioned Jane: "Women initiate most domestic violence."

To be fair, not all who cross Dov Charney's path are driven to sue. As one American Apparel model put it, to the glossy Radar magazine:

"Why do people love to hate Dov? Maybe it's because he's exactly who men aspire to be: an incredible entrepreneur, constantly surrounded by beautiful people, successful, powerful.

"And for women, maybe he's the man they've always wanted in their lives, the one who shoves French takeout in front of them, tells them they're beautiful in spandex, and gives them vibrators just because."

It's true - how many men care enough to say it with vibrators, the gift that keeps on giving?

So, does Dov Charney really care what people think?

Have a look at the sculpture that greets guests to his Los Angeles home:

Guess not.
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No positions in stocks mentioned.
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