American Apparel to sack CEO after alleged misconduct investigation

19th Jun 2014 13:39

US-based clothing retailer American Apparel has announced plans to sack its Chief Executive Officer (CEO) Dov Charney after an ongoing investigation into "alleged misconduct".The company has voted to replace the Chairman, who started the group over two decades ago, in 30 days under the terms of his contract, it said in a statement on Thursday night.American Apparel did not go into details but said that the decision to replace Charney "grew out of an ongoing investigation into alleged misconduct". However, his exit follows numerous allegations of sexual harassment over recent years. The stock surged in early trading on Thursday as investors reacted to the news. Shares were 13.3% higher at 72.5 cents by 09:51 in New York.The firm has appointed its current Chief Financial Officer John Luttrell as interim CEO effective immediately. David Danziger and Allan Mayer were named as Co-Chairmen of the board.The group, which is known for its risqué advertising, faced legal action in 2011 after a former worker, Kimbra Lo, alleged she was sexually harassed by Charney, the New York Times reported.Mayer said in a statement: "We take no joy in this, but the board felt it was the right thing to do."Meanwhile, Danziger said: "Dov Charney created American Apparel, but the company has grown much larger than any one individual and we are confident that its greatest days are still ahead." "The board is working with a search firm to identify candidates for the job of permanent CEO and, based on our initial discussions with the search firm, we expect the list of possible successors will be impressive."WS