DOV CHARNEY courts controversy. The 37-year-old founder and chief executive of American Apparel, the largest T-shirt manufacturer in America, has been called a brilliant businessman, an amateur pornographer, a Jewish hustler and a man with a social mission. He is admired for single-handedly creating one of America's most successful fashion retailers, for devising his company's sexually suggestive approach to advertising and for treating his workers much better than his rivals. He is also envied, loathed and criticised for all of these things.
As he prepares to take his company public, Mr Charney is trying to strike a less provocative tone than he used to. Previously he emphasised his use of sex as a marketing tool and his tolerance of his workers' sexual preferences: he even posted a video of himself walking around in his underwear on his company's website. Today he prefers to talk about his belief in capitalism, self-interest and globalising markets. But true to form, Mr Charney is taking his firm public in an unusual way. On December 19th American Apparel announced its takeover by Endeavor Acquisition, a “special-purpose acquisition company” formed for the sole purpose of seeking out takeover targets. The deal, due to be completed this summer, will allow Mr Charney to go public without the scrutiny that attends most stockmarket listings.
American Apparel's rise is a striking success story. Mr Charney opened his first shop in 2003. Today he has 143 in 11 countries selling casual clothes for men, women and children. American Apparel's sales for 2006 were an estimated $300m. His company's 80% gross margin, an indicator of its profitability, is well above the industry average of 60%. Its unbranded, brightly coloured and moderately priced T-shirts, sweatshirts, underwear and jeans have become wildly popular among the young, well-travelled crowd that Mr Charney says represents the “world-metropolitan culture”.
From American Apparel's inception Mr Charney has put great emphasis on making his workers happy. Pay is performance-related, and amounts to $12 an hour on average, far above California's minimum wage of $6.75. American Apparel staff can buy subsidised health insurance for $8 a week. They are entitled to free English lessons, subsidised meals and free parking. Their workspace is properly lit and ventilated. When the company goes public employees will receive an average of 500 shares, expected to be worth about $4,500.
Anti-sweatshop activists praise Mr Charney as a pioneer of the fair treatment of garment workers. The benefits he provides are expensive: subsidising health insurance costs his firm $4m-5m a year; subsidising meals costs another $500,000. Even so, Mr Charney says he has no plans to scale back these benefits. He considers his contented workers the reason for his
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