American Apparel CEO Dov Charney has been fired by the retailer’s board, making way for a potential sale of the company.
The board of directors cited “an ongoing investigation into alleged misconduct” that it initiated earlier this year as the reason for Mr Charney’s sacking, according to reports in New York Post.
The board announced it had voted unanimously on the decision at its annual meeting on Wednesday,
While the board did not comment, sources told the New York Post, Mr Charney’s personal conduct with women, which has been the subject of a string of sexual harassment suits by former employees, was among the longstanding issues.
Mr Charney, 45, has made headlines both for his championing of U.S. manufacturing and support of immigrant workers.
Mr Charney gained notoriety for the company’s sexual ads featuring young women, for walking around his Los Angeles office in his underwear.
However, Ken Nisch chairman of JGA– a retail branding and design firm – said company boards encourage controversy that shows results.
“Boards will put up with an enormous amount of controversy when there’s results,” Mr Nisch said told USA Today.
However he believes Mr Charney, who founded American Apparel on his love for a plain T-shirt, hasn’t done enough to evolve beyond basics.
“What they have is a tired concept,” he said.
“I imagine (the board comes) to the conclusion, saying, ‘He’s not delivering a plan to move us forward, and we’ve got all these liabilities around us … so why are we putting up with all these liabilities when we’re not seeing a clear path to the next chapter?'”
In 2010, Mr Charney faced a lawsuit by his former American Apparel employee Kimbra Lo, who accused him of sexually assaulting her during what she believed to be a job interview as a company photographer.
Mr Charney appeared in the doorway of his Los Angeles home “wearing only a towel,” then grabbed Ms Lo “and violently kissed her,” the lawsuit charged.
When she protested and started to leave, Mr Charney apologised and told her to stay, assuring her that “they would just talk about business.”
Three other American Apparel female employees who are plaintiffs in the case separately alleged they were required to sign purported arbitration agreements when they were hired.
The agreements were designed to “keep employees from disclosing unlawful conduct” by the company and its executives, as well as force the women “into an unfair forum”.