By Kevin Meyer
Over the years I've often told the story of American Apparel. A company that manufactures trendy but still basic clothing – think lots of plain t-shirts and underwear – in the U.S. employing thousands of U.S. workers paying them above minimum wage. And making a profit, believe or not. Perhaps… or perhaps not.
American Apparel Inc., the edgy maker and retailer of casual clothes, warned Tuesday it
may not be able to remain in business amid declining sales and mounting
The news sent American Apparel shares falling nearly 26%
during regular trading to an all-time low of $1.03 on the American Stock
So what's going on? Just a year or so ago they were the star of the clothing world, opening stores left and right.
The company's warning had some financial analysts questioning whether Dov Charney, its chief executive, has the right skills to run American Apparel. "His
enthusiasm for his product is perhaps at odds with the discipline that a
retailer needs," said Richard Jaffe, a retail analyst at investment
bank Stifel Nicolaus.
Peter Schey, a spokesman for the Los
Angeles company, said there have been talks about bringing in more
executives to the retailer. Mr. Charney, he said, is "aware of the need
for increasing assistance on the management side."
There you have it. Although American Apparel had no formal knowledge or implementation of lean manufacturing methods – and a couple years ago I visited them to investigate first hand – Dov ran an extremely streamlined operation. Apparently too streamlined for such a dynamic and growing company.
Sometimes you just need some experience – financial, operational, sales, and otherwise. And sometimes just trying to surround yourself with great experienced people doesn't work either – you have to know what to look for and how to evaluate advice.
American Apparel may survive, but it will probably require an injection of outside talent that has investor-driven authority to override Dov's desires. How much do you want to bet that probably includes outsourcing overseas, chasing the dream of cheap labor nirvana? Time will tell.
You may be very smart and able to convince the world of your vision of hope and change and a different way of doing things. But sometimes you still need real experience to avoid the pitfalls of the real world. Whether you're Dov… or many other leaders in similar circumstances…