The Five Dumbest Things on Wall Street This Week
The Five Dumbest Things on Wall Street
04/18/08 - 06:59 AM EDT
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PLAY BEAT THE STREET GAME NOW
1. American Apparel -- Accounting in Peril
American Apparel APP CEO Dov Charney isn't afraid to let it all hang out. Over the weekend, The Wall Street Journal highlighted Charney's propensity to strut about his factory floor clad only in the underwear he designs. American Apparel's brand largely comes from its ads, which uncomfortably straddle what one might find in a Sears catalog and what one sees in the centerfold of Playboy. Skeevy CEOs are not a shock to Wall Street, but Charney brings the sleaze to another level. His company has fended off three sexual harassment lawsuits so far, and a fourth is currently in the works. It's not hard to imagine employees feeling a bit uncomfortable in Charney's shop. According to the Journal, he hosts photo shoots in the basement of his L.A. mansion, which also contains the reams of vintage pornography he collects. In Charney's defense, constriction can certainly stifle a firm's growth and creativity. But getting too free and loose also can take a toll on a balance sheet. The scabrous CEO shows dim awareness that his company is in trouble. He's on record calling his own CFO, Ken Cieply, a "complete loser," a man with "no credibility." Charney would be well advised to employ someone who instills more confidence. His company is rapidly opening new stores nationwide even it packs on debt. In fact, the company's IPO -- a buyout by a "blank check" shell company -- looks more like a last-ditch grab at funds than a means for genuine expansion.
Dumb-o-meter score: 93. Charney should remember he's not just a member of American Apparel's boys club -- he's also the CEO.
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Corn pops as beans get the drop; what does Bear do now?; Schering-plowed; UBS -- stands for 'under the bus'?; AAR maintains innocence, not much else.
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