Dov Charney Blames Illegal-Immigrant Crackdown On American Apparel's Woes

Dov Charney.

American Apparel chief Dov Charney this week blamed last year's federal crackdown on its undocumented workers for the downtown L.A. clothing maker's current economic woes. Although American Apparel is weighed down by $120 million in debt, a market saturation that includes about 280 stores, and fickle fashion movements among its young customers, the U.S. government's immigration policy is to blame, he says.

Charney told investors in a conference call Tuesday (via Fast Company) that "The real core issue is we lost 2,500 people" when the company had to let go of workers after immigration officials asked the company to provide proof of residence. (That number is debatable, with 1,800 being reported elsewhere).

While Charney admitted retail sales were down (a company statement last week indicated a 16 percent decline) he said wholesale business, 50 percent of American Apparel's revenue stream, was up.

In fact, Charney argued, the company has had a hard time keeping up with demand -- and maintaining its vertical, made in America strategy -- without immigrant labor. A spokesman told Fast Company that those laid-off workers, by the way, did not leave the country.