Dov Charney Clings To Relevance, But For How Much Longer?

Dov Charney would like you to know that he is still kicking around. He spent a day in Toronto with a writer for the magazine Flaunt, and in the resulting 6,000-word piece he comes across as alternately petulant, clever, impassioned, self-absorbed, and utterly unaware of his own encroaching irrelevance.

But first you should know about a food called pizza. The first five paragraphs of the piece concern not Dov Charney or American Apparel, but pizza. We learn that Dov hates pizza. Pizza is like t-shirts. No, pizza is like the world we live in. An American Apparel employee orders pizza before the Toronto rummage sale, and this displeases Dov. Greatly. We learn about "China, where pizza is still viewed as an upscale dining experience." And Charney says things like, "I like Italian high-end pizza...I'm not interested in commercial pizza. I think it's disgusting." Actually — pizza is like licensing. Charney is "strongly against" licensing.

Dov Charney hates pizza : pizza is licensing :: Dov Charney hates licensing. That actually holds together as a syllogism, if one ignores for a moment that it is utterly meaningless.

"It's not the pizza. It's the mojo," Flaunt reporter Matthew Bedard remarks at one point. "And because this metaphor continues to rock, Charney worked, at one point, as a pizza delivery boy." Throughout the piece, returning over and over again to his panoply of "Pizza is..." metaphors, Bedard reveals himself to be a writer sadly in need of an editor willing to tell him what does, and does not, "rock."

Bedard wastes no opportunity to lavish Charney with praise. He describes the American Apparel founder as "a leader — a workhorse akin to the industrial legends of modern time." He quotes him and his acolytes at length. American banks, Charney says, have "divest[ed] from making loans to American manufacturers because it's been seen as something of the past, but I see it as something of the future. But if the banks don't do it, the government could underwrite some of the industrial financings that are necessary to build the infrastructure to enlarge or rebuild America's manufacturing prowess, because I think that's important." Charney seems to be suggesting a bail-out of the apparel manufacturing industry. But then he would: thanks to decisions Charney took to expand his retail operations at the height of what proved to be a real-estate bubble, American Apparel owes, at last count, over $160 million to supermarket magnate and modelizer Ron Burkle, skeevy private-equity firm Lion Capital, and the Bank of America. The last time American Apparel's stock price traded above $1 was August 3.

American Apparel has been the focus of S.E.C. investigations and subpoenas from U.S. Attorneys, it has repeatedly received delisting warnings from the NY Stock Exchange, and its finances were apparently so poorly kept that its longtime auditors unceremoniously dumped it. American Apparel underwent its foolhardy, kudzu-like retail expansion in a calendar year when it did not, in fact, have a C.F.O.: junior staffers did the bookkeeping, because the last person to hold the position literally died of a heart attack. When a C.F.O. was eventually hired, Charney promptly told the Wall Street Journal that he was "a complete loser" and a real stickler for details. Recently, there has been something of an exodus among executive management — in the past three months, the chief business development officer, acting company president, and executive vice-president have all resigned. Although the company swung to modest profitability earlier this year, after more than two years of successive declines in same-store sales, it is far from stable and financially hale. In fact, it came within days of bankruptcy as recently as April, when Charney was forced to reveal American Apparel had only $5 million in cash on hand and needed emergency financing. Not that you'd know any of that from reading Flaunt.

The piece is incredibly poorly written. Friendly warning: if you attempt to read the whole thing, you will encounter sentences as preposterous as, "But realistically, due to the crises faced by a world reaching varying types of critical mass, the 'boogie man' has moved out of the lens." (That 'boogie man' who used to be inside the very lens of — well, the lens of something — is, as best as I could tell, immigration.) The story is filled with solecisms and grammatical errors. "Revile," the verb, is mistakenly used in place of the noun "revulsion"; "systematic" is similarly used where only "systemic" would (begin to) make sense; the accounting term "EBITDA," for Earnings Before Interest, Taxation, Depreciation and Amortization is given, repeatedly, as "EBITA" [sic]; someone took the time to italicize "au natural" [sic] but not to check the correct spelling of "natural" in French. (There's an "e" in it.) Of American Apparel's senior management, it is said that many "principles [sic] began in entry-level positions," and Bedard writes that because of globalization, goods are now made in sweatshops "in order to be scuttled around the world." He probably means "shuttled," unless those sweatshops are in the habit of manufacturing old ships. Perhaps this seems like the pickiest of nits to pick, perhaps this kind of critique seems excessive or petty, but in my experience, sloppy writing is almost invariably evidence of sloppy thinking. How far, on matters financial, should you trust a writer who can't even spell 'EBITDA'? And why should you trust him on anything else?

Reading this is a slog. Dov Charney's mobile phone can't simply be Dov Charney's mobile phone; it must be "his unlimited-minutes-stretching cell phone." American Apparel doesn't just set trends; it has attained "trend-seeding status." West coast creative director Iris Alonzo's cheekbones can't simply be high; they are instead "vertically-daring cheekbones." (Note to Bedard and Flaunt magazine's copy-editors, if any exist: adverbs ending in -ly are never hyphenated because they necessarily modify the words that directly follow. One ought no more to hyphenate "vertically daring" than one would "readily available," "beautifully made," or, for that matter, "necessarily modify." The error only compounds the fact that "vertically daring cheekbones" is still a stupid way to describe someone's cheekbones. And yes, "vertically-integrated," as in American Apparel's much-touted "vertically-integrated manufacturing," is also incorrect.) Then there are all the metaphors that are stretched to breaking point — oh, the metaphors, they distend like the cheese on a hot slice of pizza! — the tortured syntax ("statements...many similar of which can be collected while strolling through the factory"), and the weird moments where Bedard feels the need to just come out and tell the reader how he really feels, as in:

There are some who don't want American Apparel to succeed. They might have ridden the brand ‘til the wheels fell off, and then fell out of love. They might be stock traders or unhip jocks. They could be gender rights activists. They could hate queers. Its zeitgeist might have scared them. They might be afraid of "losing our jobs" to Mexicans. They might yearn for their youth.

Oh, yes. The well-known and highly organized queer-hating, stock-trading, Zeitgeist-fearing, old, unhip "gender-rights activists" who hate Mexicans, and American Apparel, and "success," and probably freedom itself. They are such a drag.

Charney's thoughts on the recession are dutifully recorded.

"I think the last two, three, four years," he says, "will be remembered as hard times for the world. We all remember the 1929 Depression. I'm not saying this is a depression but we will remember this area [sic]. Some people call it the Great Recession. So it knocked a few projects off the rails. Some magazines folded, some TV stations never got launched. Things happen, right? But we basically made it out of the tunnel. We had issues — the United States government immigration. Things came up, triggered issues with our ability to generate profits, triggered some issues with some of our banks and lenders, triggered some issues with our ability to finance our company. Well, we got through it all. We're through the tunnel, big deal, couple scars brushed off. Everything will heal."

It's nice to know that Charney — who fancies he might make "$40-$50 million" in "EBITA" [sic] in fiscal '12 and "100 plus" million in the near future; that level of optimism is no surprise given that Charney once told me how he planned to turn a profit in 2010, a year in which his company would in fact go on to lose $86.3 million — feels he can refer to the recession in the past tense, even as the real unemployment rate remains well above 15%.

And Charney has this to say about the numerous sexual-harassment lawsuits he has settled:

"It's getting strange, you know?" he says, of sexual fear-mongering. "Things are strange. Like, at our company, we're all about gay rights — everyone's sexuality is human. But, there's still the conservatives, the scared people, just looking for a little enemy, looking for new sexual things to clamp down on. But we don't want to fall into that trap — only talking about sex — because the larger message gets lost. The problem with me is that my personal sexuality, or whatever, has been used against me, and it's taken away from our ideas. It's like a great gay guy had fantastic ideas, it's 1964, and everybody's like ‘Geez, geez, he screws guys in the asshole.' Yeah, he screws guys in the ass… So what? I like to fool around with girls. Get over it."

Being a wealthy, white, straight man in American in 2011 really is just the same as being gay in 1964.

The photographer of this feature, the handsome Albert Kodagolian, places a knowing arm over Charney's shoulders and remarks, "Oh Dov, all those broken hearts."

Charney smiles and replies, beleaguered, "You know, that's the weird part. I'm the one with the broken heart."

Later, Charney calls Bedard into his hotel room to literally show him his warts. If Bedard were a woman, of course, we know from experience what body part Charney would have chosen to expose, alone in his hotel room in the hours after midnight. In a way, it's comforting to know that Charney is still out there, still being crazy on the record, and still reeling in journalists who mistake charisma for character.

Depending on how long Lion Capital consents to extend American Apparel's financial lifeline — and how long American Apparel can afford the interest rate Lion jacks up every time Charney's company can't meet the terms of its debt agreement, which at last count was 18% — the "one day with Dov Charney" piece may not be relevant for much longer.

American Contrarian [Flaunt]