Charney restarts American Apparel, with a new name
L.A.-based clothing mogul determined to make the most of his second chance
Dov Charney’s warehouse for his new company sits on a desolate street in South Central Los Angeles, about six kilometres south of American Apparel’s former downtown headquarters. Inside, he looks ragged under a few days of stubble, dressed in a white short-sleeve polo shirt, white pants, and white sneakers.
It’s uncanny he’s here at all. Since his ouster from American Apparel in 2014 and subsequent failure to buy back the company he founded, Charney has repeatedly vowed with all of his old, oozing certitude that he would start all over again if he had to. It would be a company just like American Apparel — only better.
But American Apparel’s 2015 bankruptcy wiped out most of his net worth, so where would he get the money? Didn’t his tawdry past of sexual harassment allegations make him radioactive? And shouldn’t American Apparel’s collapse prove that making clothes in the U.S. is a fool’s errand?
Yet here he is, at 48, overseeing a startup with seamstresses and fabric cutters and boxes of T-shirts waiting to be shipped across the country. He’s envisioning a company that will someday hit $1 billion in revenue. (American Apparel topped out at $634 million in 2013, all figures US.) “We’re building, grooving, growing,” Charney says.
His new company, Los Angeles Apparel, was launched late last year as a wholesale business — just like American Apparel’s origins in 1989 — selling blank basics such as T-shirts and sweatshirts. As he walks through a production floor humming with dozens of sewing machines, taking phone calls and answering questions from underlings, Charney lays out his comeback plan.
“We had six sewing machines, then 12 machines. It was a nailbiter,” Charney says. “It still is a nail-biter. That’s part of the chills and thrills of starting up a business. You’re always on edge, but I love it. The workers are happy. It’s exciting. We want to prove something.”
This new venture can fill the hole left by American Apparel’s collapse, as Charney sees it, offering the same advantages of his old company. Los Angeles Apparel can fill bulk orders faster than overseas competitors while delivering American-made goods that have cachet with customers.
Even his customers are the same. Bob Winget started buying from American Apparel more than 15 years ago after Charney pitched him on higher-quality, soft-cotton T-shirts as the wave of the future. Winget, the chief executive of Cincinnati-based TSC Apparel, eventually bought $50 million of clothing from American Apparel each year. TSC now has a multimillion-dollar business with Los Angeles Apparel, selling the startup’s clothes to concert producer Live Nation Entertainment and screen printers who previously purchased American Apparel.
“We had a lot of customers who loved the brand, so it’s been a pretty easy transition,” Winget says. As for Charney, whom Winget speaks to almost daily: “I told him a lot of people don’t get a second chance. He’s getting one, and he’s determined to make the most of it.”
American Apparel’s board used claims he mismanaged the company to fire him three years ago. He tried to regain control by borrowing $20 million from a hedge fund to buy more stock. But that effort failed, and he was wiped out when the company filed for bankruptcy in October 2015.
It took him about a year from the bottom of bankruptcy to restart his renamed but otherwise familiar operation. Charney won’t say how much revenue Los Angeles Apparel is generating, only that he expects to surpass $20 million in annual sales in the next 12 months. He left no more than a vague impression of how much money he’s raised, referring to investors and an asset-backed loan. There are now 350 employees.
Stepping off the production floor into sparse offices reveals a conference room equipped with a cot, messy sheets, and a pillow. “I live in here, by the way,” Charney says. “I will not leave. This is my bed. This is my room. This is where I sleep.”