Biz/Tech

Troubled American Apparel Names New Temporary Chief Executive

Sep 29, 2014 10:58 PM EDT | By Eunice Tagalog

Well-known clothing manufacturer and retailer American Apparel puts a new chief executive on the pedestal as the company faces a public battle with its founder and former chief, Dov Charney.

The Los Angeles, Calif.-based clothing company hired Scott Brubaker, managing director at Alvarez & Marsal, a firm that helps troubled companies resolve their problems by identifying reasons for failing performance and returns them up their feet.

American Apparel relieved its founder, Dov Charney from his leadership responsibilities in the company for alleged personal and professional misconduct, exploitation of money from the company and not being able to resolve the allegations of involvement in sexual harassment related to a leak of a former employee's naked photographs.

Charney had been accused of sexual harassment by several female employees.

As of the moment, Charney remains at the company no longer as chief but as a consultant.

American Apparel has had its own fair share of financial problems, losing over $100 million last year.

The company's stock also went down by almost 80 percent during the past five years.

The second quarter revealed that American Apparel reportedly diminished its losses to $16.2 million.

However, the company still faced financial issues related to problems with inventory as caused by building a new distribution center in La Miranda, Calif.

The company which, famous for its edgy T-Shirts, spandex leggings, loses market as other brands like H&M and Forever 21 are offering cheaper clothes.

 The company, however, stated that the quality of their clothing speak for themselves and that its factories are up-to-date with the latest trends.

After Charney got fired, he joined with a New York investment firm Standard General and got hold of 43 percent of American Apparel's shares.

However, both Standard General and American Apparal agreed to not put Charney back into a position of authority.

Meanwhile, the incoming chief, Brubaker stated that the ailing clothing company still has "strong underlying business."

He reiterated that his role was not to revamp the whole brand, but to make it easier to handle for the next chief.

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