American Apparel’s controversial founder has sold the clothing company to an investment firm for $382.5 million. The company made a name for itself by manufacturing guilt-free clothes in downtown Los Angeles, where it pays workers double the minimum wage and offers them healthcare, free meals and English lessons.
New York Times:
At the heart of American Apparel are two threads: a high-minded business model that requires clothes to be made in the United States at double the minimum wage, and a retro-chic that glamorizes the T-shirt-and-jeans simplicity of the 1970s and ‘80s.
All of the clothing sold at the chain is manufactured at a factory in downtown Los Angeles, rather than in Asia, where the vast majority of its competitors’ goods are churned out. American Apparel provides its employees with subsidized health care and meals and with free English classes.
The company’s progressive message has won over thousands of young urbanites—Mr. Charney refers to them as “Young Metropolitan Adults”—who flock to the chain for bright-colored T-shirts, leggings and underwear. American Apparel is expected to sell $275 million worth of them in 2006.
But as American Apparel has expanded, its founder, Mr. Charney, has been dogged by accusations of sexual harassment and a bizarre management style that could make it harder for him to operate within the traditional boundaries of a publicly traded company.