American Apparel, the risqué-advertised and hipster-chic clothing retailer, is struggling to lift itself out of the financial dumps. The company's debt has risen to $120.3 million, up more than 33% since March. Share prices have plummeted to an all-time low of 66 cents after consecutive days of 20% or higher drops. It missed its recent 10-Q filing and received a letter from the NYSE that threatened their de-listing. But neither American Apparel's financials nor nasty reports of sexist hiring practices are to blame, says founder and CEO Dov Charney and a company spokesperson.
The problem here is immigration reform.
In a weekly conference call today with international stores and corporate heads, the AA chief blamed a lack of immigration reform and media misunderstandings for the company's woes. According to a source listening to the call, Charney disputed reports that the company is nearing bankruptcy and out of cash. Rather, he said, one of the core issues is AA's employment troubles. "The real core issue is we lost 2,500 people," Charney said, referring to what American Apparel attorney and spokesman Peter Schey calls a "routine" 18-month investigation and early 2010 immigration and customs enforcement action that resulted in the loss of workers, many of whom didn't have proper immigration documents. (Schey tells Fast Company the number of employees shed after the enforcement action was more like 1,500.)
Charney, who's long been as passionate about hiring immigrants at fair wages as he is about nubile hipster girls in boy briefs, told employees today that their replacements should have been trained sooner, but since they weren't, production suffered and store inventory wasn't being replenished. Our source characterized his mood about past and present presidential presidents' immigration policies as "bitter." It's an explanation he's used as far back as June of this year.
Spokesman Schey echoed that sentiment, faulting the Obama Administration for targeting a company that was paying its employees (none of whom the company knew were undocumented, Schey adds) living wages. "In my view it was a complete waste of time," Schey says of the worker inspection. "By the way, those workers did not leave the United States," when they were either fired or resigned, Schey tells Fast Company. "Those workers were literally pushed by the Obama Administration into the arms of sweatshop employers. I stayed in touch with many of them, and the next stop for them was at a sweatshop."
Additionally Charney—and Schey—did acknowledge that retail sales were down, though many stores outside the United States are thriving, but Charney added that wholesale and online sales are up, and wholesale makes up at least half of the company.
Schey denies that recent reports about image requirements for AA employees have had an impact. "I'm definitely in the loop on all of that," he says, adding later, "I think the notion that Gawker and a few of the blogs have pressed the idea that every new employee has to be photographed so Dov can personally approve them is absolute nonsense. He doesn't have the time to do that, and he doesn't have the interest in doing that. If he did, he would need a new pair of glasses."
Schey adds, "All you'd have to do is walk into American Apparel stores, and you'd be hard pressed to find people who'd win any beauty contests." Asked to clarify, he said, "How could I put that simply? You could walk into any American Apparel store and hopefully appreciate that people ... that retail ... what do you call them—salespeople are hired based upon their ability to sell the brand or their ability to identify with and sell the brand and certainly not based on their looks."
Our source could not determine if at any point during Charney's conference call today he pleasured himself.
Additional reporting by Tyler Gray