The End of the American Apparel Dream

Dov Charney, the founder and current chairman and Chief Executive of struggling Apparel Maker American Eagle has been fired by its board of directors for among other things - sexual harassment. 

While American Apparel's health as a company has declined under Charney's leadership, this is a rare case in which his management of the company itself doesn't seem to be the main reason behind the board's decision.

The official reason behind the firing was "misconduct", but there has been wide speculation that it is due to the multiple accusations of sexual harassment against Charney. The first cases of such accusations came as early as the mid 2000s, and about half a dozen of these sexual harassment lawsuits have been known. However, they have all been thrown out, settled, or remain pending to this day. Perhaps the board finally decided that Charney's controversial ways wasn't worth his status as an executive; particularly as American Apparel's financial health continues to worsen. 

Ironically, if the board was hoping to soothe the dropping stock ticker, this will probably backfire on them, at least for the short term. Charney, who still owns 27% of the company is gearing up to sue for his right to remain chief executive. What's worse is that he is looking to bring some sympathetic stockholders into the mix, ensuring that this will be a long, drawn out battle. Thus, the company will have to deal with major PR turbulence in the midst of its recent financial uncertainty, having lost money for three straight quarters. Perhaps by this situation, some may be able to snap up AA's stock at a reduced price. But for others, the uncertainty is just too much.