Business

Dov Charney, Montreal-born founder of American Apparel, officially sacked

Former American Apparel founder Dov Charney of Montreal, who still served as a consultant to the company, was terminated Tuesday "for cause" after an internal investigation.

Charney's faced lawsuits alleging inappropriate sexual conduct

The American Apparel factory headquarters is pictured in Los Angeles in July 2014., not long after CEO Dov Charney was ousted. (Jonathan Alcorn/Reuters)

American Apparel has fired founder Dov Charney and named longtime fashion executive Paula Schneider to be its next CEO.

The Los Angeles-based company's board voted to oust Charney as CEO in June, citing allegations of misconduct. He was put under suspension, but still served as a consultant to the company. American Apparel said Tuesday that it has terminated his position "for cause" after an internal investigation.

Messages left with a lawyer who has represented Charney this year were not immediately returned.

Dov Charney is seen in a file photo at the LA Fashion Awards. Charney was born and raised in Montreal before heading to the U.S. for university. (Stephen Shugerman/Getty Images)

American Apparel Inc., which Charney founded in 1998, manufactures clothes and sells them in 245 of its own retail stores in 20 countries and has about 10,000 employees. It is famous for selling American-made goods and for its risque advertising.

Charney has been the subject of lawsuits that allege he had inappropriate sexual conduct with female employees. He has said he had consensual sexual relationships with workers.

American Apparel said Tuesday that a special committee of its board decided, based on the results of an internal investigation conducted by FTI Consulting, that "it would not be appropriate for Mr. Charney to be reinstated as CEO or an officer or employee."

The company has suffered financially. It has recorded annual losses since 2010 and reported three quarterly losses this year. Its stock has dropped 53 per cent in 2014.

Schneider, who officially starts as CEO on Jan. 5, has been a senior executive at retail and clothing companies including Warnaco, Gores Group and BCBG Max Azria.

American Apparel has operated under two interim CEOs since Charney's ouster, most recently Scott Brubaker, who will continue in that role through the end of the year.

Shares rose five cents, or 8.6 per cent, to 63 cents in after-hours trading. The stock closed up three cents at 58 cents on Tuesday.

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