This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

American Apparel Should Hire One of These 6 Executives to Replace Dov Charney

Stocks in this article: APP JCP FOSL LB RL AMZN GPS TGT ANF

NEW YORK (TheStreet) -- Could ex-J.C. Penney (JCP - Get Report) CEO Ron Johnson be the next CEO of American Apparel (APP - Get Report), taking over the reigns once held by the lightening-rod known as Dov Charney?

Such a scenario may seem like a long shot but at least one industry observer suggests that Johnson would be a good fit for the Los Angeles-based T-shirt maker currently involved in a high-stakes game of "Who's in Charge?"

Yet as American Apparel's board attempts to position the company for a second life, a life unlikely to include the controversial Charney, who else would be a good fit as its next chief executive? (John Luttrell, American Apparel's finance chief, was appointed interim CEO last month.)

Besides Johnson, industry sources speculate that Diane Neal, the former CEO of L Brands' (LB) Bath & Body Works would be a good candidate as well as retail veteran Mickey Drexler, currently the head at J. Crew and Australia's Billabong CEO Neil Fiske. Others mentioned as possible replacements for Charney include Tony Hsieh, CEO of the online shoe and clothing retailer Zappos, a unit of Amazon (AMZN), and former American Apparel executive Marty Staff.

"American Apparel is a very strong brand," says Edward Hertzman, founder and publisher of Sourcing Journal, a publication that focuses on the apparel and textile industry. "Replacing Dov [Charney] is going to be essential to turning this company around."

American Apparel, Is It Fit for a Buyer?

Standard General Rides to American Apparel's Rescue

American Apparel's Next Step Is Likely the Courthouse

Things may have settled down somewhat at American Apparel following its agreement with the hedge fund Standard General for a $25 million capital injection along with a reconstitution of its board. The changes created a committee to oversee the investigation into alleged misconduct by founder Charney, who was removed as CEO in June while designating him as "strategic consultant."

Following the investigation, the new board committee is expected to determine whether Charney can return to American Apparel. Few argue that the company would be better off if Charney doesn't return.

"No matter what they do with him, his presence as a leader has to be minimized," says Jason Hanold of boutique executive search firm Hanold Associates who specializes in placing executives in the retail, health care, financial services and technology sectors. "The question has become more about if they really hope to resuscitate -- and I don't mean fire fight -- to really avoid bankruptcy they really need to bring in a new leader. Frankly he's been a huge distraction to the organization."

Yet any new CEO will still have to face multiple challenges. American Apparel has been losing money for the past five quarters and servicing its $251 million in debt. A new CEO will also have to answer to a newly empowered board and a hedge fund with a big stake. 

Longer term, the 250-store chain must face the reality that traditional brick-and-mortar retail stores are losing revenue to e-retailers. American Apparel has a popular and well-known brand, but that may not be sufficient to offset consumers' increasing preference for online shopping.

"They need a leader who can get [employees] re-engaged and give them a sense of where they are going," Hanold says. "I think they need a big leader who brings a sense of certainty and confidence."

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs