Charney Says American Apparel Results Bolster His Case

Dov Charney, who is fighting to be reinstated as American Apparel Inc.’s chief executive officer, said the retailer’s improved second-quarter results show he was doing a good job before getting pushed out June.

The clothing chain had a narrower net loss of $16.2 million, compared with $37.5 million a year earlier, the Los Angeles-based company said yesterday in a statement. It also an posted an operating profit of $2.58 million, its first in six quarters. Meanwhile, same-store sales, a key measure of a retailer’s performance, fell 6 percent.

Charney said the earnings serve as a report card for his performance, since he was CEO during all but 12 days of the quarter. They demonstrate that Charney was coping with broader retail challenges and positioning the company for growth, he said in a conversation with Bloomberg TV’s Trish Regan.

“There was a lot of cold weather and the industry as a whole is challenged,” Charney said. “We’re going to have to take market share from competitors to grow sales.”

American Apparel shares rose 9.1 percent to $1.02 at the close in New York, following a 5.6 percent gain yesterday.

Charney has fought for his return since the board ousted him on June 18, saying he had engaged in misconduct. The CEO teamed up with hedge fund Standard General LP to increase his stake in the company and push for a board shakeup. Still, Charney won’t get his job back unless a committee from the reformulated board decides to rehire him, following an investigation into his history by FTI Consulting Inc.

Board Committee

Three American Apparel directors will review the findings from the investigation and decide whether Charney should return in the role of CEO or any other position. The directors include David Danziger, the co-chairman who had earlier approved his ouster, and two others who were just added to the board.

In moving to terminate Charney in June, the board said he violated the company’s sexual harassment and antidiscrimination policies and misused corporate funds, including purchasing travel for family members and charging the company for personal expenses.

The ousted CEO’s penchant for generating negative headlines also made it harder for the company to raise capital, the board said. Charney has been sued for sexual harassment multiple times, though all the cases were dismissed or sent to private arbitration.

Charney’s lawyer called the charges “baseless” and described his ouster as illegal in a letter to the board on June 19. Charney then made an arbitration demand that included claims of breach of employment agreement, defamation and infliction of emotional distress, according to public documents.

“In the end, the customer isn’t that affected by the drama,” Charney said. “Some, that are loyal to the brand, may be inspired by the fact that I’m going to survive this corporate battle. Young people like a survival story. I’m a survivor and I want to win.”

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