American Apparel Case

AMERICAN APPAREL: growing pains

Christina Eaves, Sandy Johnson, Lisa Tousant, Sheridan Mascarenhas, William Drescher
Faculty supervisors: Ellen A. Drost and Stephen J. J. McGuire

In 2007, American arrange, Inc.[i] was about to change from a private truehearted to a publicly traded company. It had become the largest vertically-integrated garment manufacturer in the United States in less than ten years, bucking a disregard in the garment industry to outsource manufacturing to low represent countries. Its founder and Chief Executive Officer, Dov Charney, was a self-proclaimed hustler whose life-style and management techniques generated controversy that most publicly traded companies eschewed. Charneys at large(p) and frank attitude about liberal social issues and sexual practice stirred up media feeding frenzies, from rag trades to nationally syndicated television. The seditious photos he selected for American Apparels ad campaigns grabbed nations attention not always in a positive way. The very way the company had chosen to go public indicated much about the CEOs refusal to adjust to tradition; in the summer 2007 American Apparel would flow with the special purpose acquisition company, Endeavor Acquisition Corp.



In addition, the companys commitment to paying high reward and generous benefits to its mostly immigrant workforce, and its Made in regular army stance, might not appeal to Wall Street investors who believed that an equal return on investment took priority over governmental correctness.
Should Dov Charney allow these Wall Street financiers to step into the American Apparel sandbox to play? What changes would American Apparel need to get in once it became a publicly traded company? Could it maintain its overpriced manufacturing base in Los Angeles? Would outsider scrutiny of its CEO, its provocative marketing, and progressive personnel policies and social agenda force the company to launch changes in strategy and culture?

AMERICAN APPAREL
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