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Lawyer Takes Over American Apparel

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By Casey C. Sullivan, Esq. on September 29, 2016 11:56 AM

It's been a bumpy ride for American Apparel, the Los Angeles-based retail chain. American Apparel stores exploded across the country in the early 2000s, quickly becoming the go-to place for American made t-shirts and hipster spandex leggings. That growth was fueled in part by the image of Dov Charney, American Apparel's founder and ex-CEO, who seemed capable of spawning sexual harassment and discrimination lawsuits almost as adeptly as fawning magazine pieces. The company struggled through an IPO, closed dozens of stores, and hasn't turned a profit since 2009.

Now, after firing Charney in 2014 and emerging from bankruptcy in February, the company is attempting to right the ship by shaking things up once again. Chelsea Grayson, a former BigLaw partner and American Apparel's current general counsel, is scheduled to transition into the role of CEO in early October, Woman's Wear Daily reports.

From BigLaw to Big Retail

Before joining American Apparel in 2014, Grayson worked as a partner for Loeb & Loeb, a large law firm with more than 300 attorneys and offices in the U.S. and Asia. Loeb didn't have a background in fashion or retail, though. She'd spent most of her career working on M&A's, including spending 13 years on Jones Day's M&A team before joining Loeb & Loeb. But becoming GC for American Apparel was a "passion project," she told Bloomberg's Big Law Business last February:

I've been following the brand, I've been a customer of the brand, and I've got a teenage daughter - so I know the brand really well. The company also meant a lot to me personally because I feel like it's a culturally significant company.

Can Grayson Save American Apparel?

Culturally significant, yes -- especially to anyone who remembers the retailer's scandalous advertising (which was so sexualized it was occasionally banned), its scandalous CEO (who allegedly chocked employees and wore nothing but underwear around the office), and its scandalous IPO (which revealed serious failings in the company's accounting).

But is American Apparel still viable?

Our guess is that Grayson still thinks so. She's said to be focused on growing the brand with Millennials, according to WWD, but the rest of the strategy "appears to be up in the air."

In August, the company brought in Houlihan Lokey to explore a possible sale. According to an unnamed insider who spoke to WWD, American Apparel's owners "really want the company to succeed moving forward and that's why they're looking for outside folks to come in and really help fuel the next stage of a turnaround." Maybe Grayson can help them get there -- but that's still a big maybe.

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