American Apparel CEO Paula Schneider To Leave Company: What’s Next For Retail Company?

The CEO of American Apparel, a major clothing brand fraught with hardship in recent years, will step down. Paula Schneider will be leaving the Los Angeles-based company on Oct. 3 after taking the helm in December 2014, Women's Wear Daily reported Thursday.

Chelsea Grayson, the company’s general counsel and chief administrative officer, will assume Schneider's role.

Schneider was appointed CEO following the departure of Dov Charney, the Canadian-born artist who founded American Apparel in 1997. Charney had left the company in June 2014 after accusations of sexual misconduct and ethnic slurs.

American Apparel, which manufactures all of its clothing in the U.S., has had its share of struggles in recent years. It had filed for bankruptcy protection in October 2015, but a judge approved the restructuring plan in January. The company has had sluggish sales but had reportedly reduced its debt.

In an interview with Forbes in January, Schneider expressed confidence in a turnaround after financial woes, citing liquidity.

In August, reports surfaced of the privately owned retailer being sued by factory employees for “wrongful termination, failure to pay overtime and retaliation for expressing concerns about working conditions and discrimination.”

Schneider's decision to depart the company was entirely her own, according to her letter of resignation, which was obtained by WWD. She explained the difficulty of leaving her post, stating “the sale process currently underway for all or part of the company may not enable us to pursue the course of action necessary for the plan to succeed nor allow the brand to stay true to its ideals. Therefore, after much deliberation, and with a heavy heart, I’ve come to the conclusion it is time for me to resign as CEO.”

Prior to stepping into her role as CEO with American Apparel, Schneider held executive-level positions with BCBG Max Azria and Warnaco.

A company source told WWD that the retailer is entering a new phase of its turnaround.

“The owners really believe in the brand [and] 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,” the source said.