American Apparel Inc. (APP) replaced its chief executive officer, Dov Charney, who has faced accusations of sexual harassment, after an investigation into misconduct at the casual clothing maker he created.
The board named Chief Financial Officer John Luttrell, a former executive with retailers Old Navy Inc., Wet Seal Inc. and Cost Plus Inc., as its interim CEO, according to a statement yesterday. Charney was suspended and will be terminated for cause after a contractual 30-day wait, Los Angeles-based American Apparel said.
Charney, 45, tested limits with the use of young, scantily clad models in advertisements for the company’s American-made underwear. That approach spilled over into his management, spawning lawsuits alleging sexual harassment. The company has lost money recently under Charney and its stock has fallen under $1. His dismissal may trigger a notice of default, American Apparel said.
In February 2006, a former employee alleged she was subjected to sexual harassment that led to a finding from the Equal Employment Opportunity Commission that reasonable cause existed that women were subjected to harassment at the company, according to regulatory filings. The company reached a three-year agreement with the employee and the EEOC in August 2013 that governs its administrative measures.
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