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American Apparel's Dov Charney Blames Immigration Reform for Troubles in Team Conference Call

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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

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  • Mara Alexander

    "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." -------------All the more reason to crack down on ALL employers and push them right back to their home countries. We admit some 800,000 LEGAL immigrants under our family reunification policies, some 15-20% of them from MEXICO alone. Are we to believe LEGAL immigrants won't do this work, especially if the company is really paying a "living wage"?

  • Scott Byorum

    Wow, you guys read a whole lot into just a little. Did I single out a minority, race, or country of origin? No, I did not. Did I single out color? No, I did not. Did I accuse AA of poor hiring practices? No, I did not. But I guess it's just a lot easier to see a picture of a white, caucasian male and assume ignorant bigot. I drew attention that a big problem is companies hiring illegal immigrants. That's even included in your argument against me, "Dras". I didn't assume anything. You, Josephine (if that is your blog that I found you answer cut and pasted in) assumed EVERYTHING. You are the ignorant one.

  • Tyler Gray

    Dras pretty much said it, but I should point out that no one found American Apparel guilty of knowingly hiring people without proper documentation. In a bunch of the cases, AA spokesman and attorney Peter Schey told me, AA was presented fake or inaccurate documentation. Regardless of how prevalent that scenario was, nothing AA did in hiring people who were later fired or asked to resign constituted an illegal hiring practice. Also, not having proper documentation doesn't automatically equal "illegal immigrant." There are tons of reasons to pick on AA, but you have to admit that, for the most part, they've been pretty pioneering in their employment practices -- at least when it comes to hiring immigrants at fair wages.

  • Mara Alexander

    All they had to do was VOLUNTARILY use eVerify which would have indemnified them against hiring illegal aliens IF it turned out that they'd checked their SS numbers. "Not having proper documentation" constitutes fraud and/or identity theft, whoever does it.

  • Dras

    Scott Byorum, you truly show your ignorance. The typical American does not want and/or cannot perform most jobs taken by migrant or so-called illegal immigrants. In the case of factory work, Americans lost that skill set a generation ago by outsourcing precious manufacturing capabilities. Waiters, car washers, dish washers, produce pickers, almost all illegal from Mexico, Ireland, Russia, Poland, China and more. Think prices are high now? Pay an “American” to pick lettuce in fields for 8 hours. As ignorant Americans forget, unless American Indian we are all immigrants or decedents– and not everyone came here legally in the early 20th century. I don’t agree w/ “giving” illegal immigrants citizen status or all benefits, but think again if Americans can afford life w/o them. Also, don’t assume illegal immigrants are only Mexicans; there are millions of undocumented Europeans here too. They just “blend” easier.

  • Lance Sjogren

    You are good at finding the most inane establishment talking points and stringing them together.

  • Mara Alexander

    Bull. Some 7 million illegal aliens are working under stolen SS numbers in jobs alongside Americans, as ICE audits, when they were done, regularly showed. For example, in California, Pacific Steel was found to be employing 200 illegal aliens who worked alongside 400 Americans.

    As for the "cheap labor" argument, you're shooting yourself in the foot, because if they were legalized those "cheap" farm workers wouldn't stay in those jobs or, if they did, would expect and demand HIGHER wages.

  • Scott Byorum

    Come down hard on companies that hire illegal immigrants and you get rid of the problem.

    By the way, it's "to blame" not "too blame".