The founder of red-hot American Apparel has the simplest possible business strategy: He does and says exactly what he wants to.
This is not your typical CEO story. But then this is most definitely not your typical CEO. I refer to the shirtless man, the scrawny, square-shouldered dude with the hairy chest talking to his mom on a cell phone while circling a picnic table in New York City's Washington Square Park. Periodically he stops to eat chicken and mashed potatoes from a plastic deli tray parked next to a woman studying Spanish. It is his first and probably only meal of the day.
The CEO--who actually answers to the title senior partner--is probably five-eight and might top 140 pounds if his pockets were full of change. With a tangle of brown hair and muttonchop sideburns that meander across his face until they meet his mustache, forming a seamless band of hair from nose to nape, the 36-year-old proprietor of one of the hottest brands in fashion bears a strong resemblance to a young Gabe Kotter with a whiff of Vincent Gallo. He is also commonly said to look like a 1970s pornographer, and that is the sort of comparison that makes him very, very happy.
He is Dov Charney--T-shirt salesman, tastemaker, ladies' man, pied piper, bon vivant.
He is the founder of American Apparel and he is proudly Canadian.
Today, on the first genuinely hot day of an otherwise mild start to summer in New York City, Charney is giddy, which by all accounts is the norm. A tightly wound dervish of energy, he sits down, then quickly stands back up and strolls off to get some private time with his mom, returning a few minutes later to say, "She's such a Jewish mother. She still treats me like I'm 15."
"Look at this traffic!" he says, taking in the legions of students, tourists, and random New Yorkers crowding the streets around the park, just a few hundred yards from his company's flagship store on Broadway. "I bet we set a record today!"
Charney is in town, rather than in American Apparel's Los Angeles headquarters--a massive pink factory adorned with billowing "Legalize LA" and "Industrial Revolution" banners--for a couple of reasons. One, as he will tell anyone who asks, is that "if you are in the T-shirt business and you're not in New York in the spring, you are an idiot." Thus, he journeys east for a month or two. This trip, though, has another, larger purpose. Charney is tinkering with his seven New York retail stores, laying the groundwork for up to 10 more. This is but part of a bold plan to open the 100th store worldwide by next summer--there are currently 57 American Apparel stores, 29 of them in the United States--and an even bolder plan to have 1,000 shops by 2008. All this from a company that had not one retail store as recently as October 2003.
"We're going everywhere," Charney says. It takes him just four months to open his stores, plain white boxes that the meticulously managed American Apparel image machine calls "community centers." A big smile pushes those hirsute cheeks up under one of the many sets of giant aviator sunglasses that almost always adorn his face.
"I should fall on my face soon and then I'll slow down," he says. "But for now, it's on."
So what is this American Apparel? A company of basics built upon a foundation of simple, plain-colored T-shirts. Tees were the first items Charney produced when he set up shop in 1997 and still account for the lion's share of the business--but the line is spreading like a rash. Today American Apparel makes socks, underwear, sweatshirts, jackets, dresses, tank tops, polo shirts, baby clothes, dog clothes, and, as of this summer, swimwear. The clothes have no logos, no ornamentation, not a single flourish or bauble; differentiation comes from an array of colors that now includes fluorescents and from slim and sexy cuts that attract young buyers and allow the simple cotton garments to serve as something larger--core elements of a fashionable wardrobe.
Charney, a Jew from Montreal imbued with what he calls "the Yiddish hustle," has forever been obsessed with T-shirts. As a teenager, he recognized that Canadians were missing out on the higher-quality, better-fitting Hanes T-shirts sold south of the border. So he'd make bus or train trips to nearby U.S. towns, stock up, return home with shirts, and sell them at a premium. At Tufts University in Boston, he kept on selling, then quit school and fell in with a guy who proposed they make T-shirts for wholesale. That venture was the seed of American Apparel. Charney knew he could develop the ultimate T-shirt, having picked up an unnatural fascination with quality and cut, two things that the major industry players (which still tend to view the item as a disposable basic) largely ignored.
From American Apparel's earliest days, Charney obsessively sourced his cotton. To experiment with fit, he went to strip clubs. Just as the clubs offer a diverse menu of women to suit every fetish, so too do they offer a diverse menu of body types--perfect for sizing T-shirts meant to flatter women's bodies. Charney also loves to be around women.
American Apparel started as a strictly wholesale operation, selling to bands, museums, artists, designers--basically anyone who wanted to print on high-quality blank T-shirts. Even today, wholesale dominates (AA has some 60,000 individual accounts), which explains why black and white still make up nearly half of all sales. From $40 million in 2002, sales have doubled or nearly doubled every year and are expected to top $250 million in 2005. With five sizes and an ever-growing palette of colors (the jersey tee alone comes in 36), American Apparel has more than 10,000 SKUs in production.
At the largest apparel-manufacturing facility left in America, some 2,000 factory workers pick from two million pounds of fabric stored on-site, then cut, sew, and finish garments. Posters, billboards, advertisements--they're all conceived and produced in the factory too, and soon a dye shop will be added. Charney once pushed an image of AA as socially conscious and sweatshop-free, but today he says the story is vertical integration. While other companies have fled America to save money, he's making a killing by staying put.
Jane Buckingham, president of the Intelligence Group (formerly Youth Intelligence), whose Cassandra Report is the arbiter of what's cool with America's youth, says that American Apparel is one of the most influential brands going. Her group surveys two sets of kids--trendsetting early adapters and mainstream followers--to get a sense of which brands are moving young people. It was among the trendsetters that American Apparel first came up a few years back. Today the brand is prominent among both trendsetters and followers, straddling a difficult line. It appears high in every category of cool--sitting alongside brands such as Marc Jacobs and Diesel that are far more expensive and spend exponentially more money on marketing. Buckingham points to a convergence of factors--the sexy imagery of American Apparel's ad campaigns, the relative inexpensiveness, the social consciousness, and the fit. "It's sort of what you want to feel," Buckingham says. "You want to feel sexy in a T-shirt that costs $12."
