US Fashion retailer American Apparel is struggling to stay out of the limelight, with ex-CEO Dov Charney now seeking $40m in damages.
The news comes after it was announced that the Los Angeles based company had spent $10.4m to investigate Charney and $7m on severance payments and employment settlements.
The American Apparel founder is claiming for damages, which are predicted to include $1.3m for vacation pay, $6m in severance, $10m for emotional distress and 13m shares in the company.
Charney is turning out to be a pricey loss for the business, as the report comes in a long line of public blows for American Apparel, which also reported a $28m decline for its fourth quarter on Wednesday. The company’s revenues were down 9.2% to $153m from a year earlier.
The retailer has had a turbulent start to the year, despite new CEO Paula Schenider declaring that she was looking to turn it around, “I think there’s also an opportunity of capturing more of the psychographics of the millennial customer — someone whose age ranges from 15 to 35” she said.
The company is also having to watch its reputation after American Apparel Casting Director, Phira Luron, came under fire following his statement that the brand would not be hiring anymore ‘instagram hoes’:
“The comment made at the end was made in jest with models whom I have a personal relationship with and did not reflect the views, or directives by the client. I apologize to all those who were offended or affected by my comments, as it was not my intention”, he said in response.
Together with a number of ad bans, the company is failing to change under CEO Schneider’s plans. Though the new CEO is aware that the, “Brand is edgy and it always will be edgy”, the company is suffering both publically and financially as a result.
Schneider said “Just because the CEO changes doesn’t mean the brand changes. The brand is the brand.”