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After American Apparel's CEO insulted his CFO, the latter (surprise) flew the coop. The ensuing spin control fell flat.
Kate Plourd, CFO Magazine
July 15, 2008
Who knew that Dov Charney, the perennially provocative CEO of American Apparel, could still find anyone to offend? After all, he's built a nearly $400 million clothing empire by using advertising that stretches the bounds of suggestive, and has let candid comments fly in interview after interview.
What got him in trouble this time — and cost him a top executive — was his characterization of CFO Ken Cieply, which appeared in a front-page article in The Wall Street Journal. There, Charney let readers know that he considered Cieply to be a "complete loser" with no credibility in the apparel industry. Cieply bolted two months later, leaving the company to seek opportunities elsewhere (or maybe anywhere).
The company did try a little after-the-fact damage control, to no avail. Spokesperson Alexandra Spunt spun Charney's comment as an "off-the-cuff remark" that had been "maliciously manipulated by the reporter." Even Charney chimed in, publicly praising his former finance chief as he headed for the exit. "His impressive pedigree in apparel was a key reason" for hiring Cieply two years ago, Charney said in a written statement.
But investors seemed unconvinced by his reappraisal. The day after Cieply resigned the stock dropped 2.3 percent. In fact, since going public in December 2007, American Apparel's shares have plummeted 48 percent.