When the latest issue of Bloomberg Businessweek arrived at my doorstep a few days ago, I was captivated by the the revealing article, Does the CEO Have Any Clothes, about Dov Charney and the decline of his juggernaut clothing business, American Apparel.
Although the problems that American Apparel are facing is not exactly new news, as part of the indie crafting community I was curious to read how the company, specifically Dov Charney, is currently dealing with their financial woes. This includes the news that their accounting firm, Deloitte & Touche LLP, had resigned amid word that AA’s financial statements for 2009 may not be reliable, a finding that American Apparel does not dispute.
Allison Abell Schwartz, who wrote the article and has kept tabs on AA’s moves, suggests that one of the company’s root problems may be the rapid expansion of their stores. Charney had launched AA’s first stores in New York City, Los Angeles and Montreal in 2003. Within three years the company had opened 100 more and today seven years later, it has more than doubled its store base. Opening those stores was a major tactic that helped AA promote and foster its own distinct brand and make its products more accessible. But as with any expansion of a business, if you don’t calculate every move strategically, you end up losing quality control which seems to be the case with AA, both financially and brand-wise.
The other problems that have devastated AA are the sexual harassment case(s) against Dov Charney himself. Charney, who built AA on the word of being an ethically responsible company, has been the center of sexual harassment cases and bizarre sexual incidents. Also quite damaging was the immigration bust that occurred at the LA Factory. In the Bloomberg Businessweek article, Schwartz wrote:
Before the financial problems intensified, Charney had been contending with damaging sexual harassment allegations followed by a devastating immigration bust. Fifteen-hundred workers at the Los Angeles factory had to be let go owing to lack of documentation and another 1,000 quit for fear of being swept up for immigration violations. For a company that is proud of its insistence on domestic manufacturing, it was a costly blow. The recession has also taken a toll; the company posted same-store sales declines from February to December of 2009 and has not reported comparable store sales results since then….
… Moving too quickly isn’t the only knock against Charney. He has been sued by three former employees for sexual harassment (one suit was dismissed, one was settled, and a third remains in arbitration), and in 2004, Jane magazine reported that he masturbated in front of a reporter while being interviewed. More recently, Gawker.com reported that American Apparel makes managers photograph its female store employees so Charney can ensure they fit his aesthetic tastes, which include full eyebrows and long, natural hair. Charney says there is no official doctrine, and that they look for people who understand the brand, know how to present themselves, and can communicate the brand’s style to its customers. Still, Charney’s record makes some wonder whether he has the judgment and credibility to oversee a large company. “The travails of their senior management, all well-known, will make fixing the brand very difficult until a management change occurs,” says Johnson of Customer Growth Partners.” Allison Abell Schwartz, Bloomberg Businessweek, August 9- August 15, 2010 issue
I had first seen American Apparel in 2004, at the beginning of my crafting years. I was online looking for cheap blank tees that I could screen print on, and the American Apparel brand seemed like a great fit. Their product catalogs featured well-fitting, vibrant-colored shirts on cute girls and guys in a great design layout that was simple and neat. At the time, this was in stark contrast to how the other blank clothing companies promoted their products in their catalogs usually featuring ugly tops, pants and visors on people that looked like pro-golfers or the yachting types. Not that there’s anything wrong with that, but I didn’t feel like those companies understood me or what I wanted from their products.
Besides the actual shirts, one of the reasons I started ordering from AA was that they were/are self-billed as an ethically and morally-sound company providing ESL classes, affordable insurance, and a livable wage to their factory workers. At the time, this type of business practice was scarce, especially in clothing manufacturing circles.
As I have changed the type of craft that I have made/sold over the years, I haven’t really had a need to order shirts for my business, but many of my crafter friends still do. Go to any craft fair, and you’ll find that American Apparel is a staple among screen printers and folks that applique. Although other blank t-shirt companies have started to compete in this market since then, the most popular being Alternative Apparel, American Apparel is still quite visible at fairs, on sites like Etsy.com, and in their 280 stores worldwide.
The design climate of AA has shifted over the years too, from creating soft, fitted tees and undies, to becoming a hipster haven, selling leggings, skirts and bodysuits that have introduced a whole new generation to the unfortunate fashion of the 1980’s. As seasons change, so do all trends, and AA has stayed on top. American Apparel is now in the preppy biz, creating updated versions of pleated pants and button-down collared shirts for this same generation. Aside from staying on top of the trend cycles, as well as creating its own trends in clothing, AA is also a leader in the hey-its-porn-but-its-not-really-porn print advertisements that grace the back page of many alternative newspapers and magazines across the country. Now, I’m all for sex not being treated as a dirty deed and I don’t care if people want to dress like cokehead hookers with see-through shirts and glam-rock leggings. People can dress however they like. But in the midst of all the sexual harassment allegations against Mr. Charney, the ads and trends put together seems to be a bit creepy.
So at this point you may be asking yourself- “What is the point of this article?”. The point is this- the indie crafting community moves as a whole to educate consumers on the benefits of buying handmade, buying local and using environmentally friendly practices. As a community, we also embrace and promote good business practices and teach the public to care about where their products come from. As an economic force, our community spends millions of dollars every year on supplies, and we have the power to choose where those dollars go. So before you spend another penny, take a hard look at where it’s going. For better or worse, American Apparel is part of our community. They have set the bar high in terms of being a morally-responsible business. So as a community, let’s help keep them accountable to that mission.
American Apparel is in the process of making some major changes, including the appointment of a Quality Control Director and has added new senior staff. Can this company that was founded on one man’s dream fix itself to become the company that it purports to be? The verdict is still out, but as with most dreams, anything is possible and I hope so.
