American Apparel Inc. (AMEX: APP) has always been unlike any other clothing company: a flamboyant CEO who received oral sex during a magazine interview and marketing logo- and image-free clothing that has become one of the hottest brands in the country.

And the weirdness continues. CEO Dov Charney has been a vocal proponent of immigration rights, and many of the workers at the company's Los Angeles factories were immigrants. Now 1,500 of the company's 5,600 factory workers are being fired because of documentation issues following a U.S. Immigration and Customs Enforcement investigation.

We might be tempted to think, in this day and age, that a move as stupid as this one could not happen in our enlightened business world. However, the CEO of American Apparel (AMEX: APP), seems to think otherwise.

According to a story provided by Gawker.com; "American Apparel's ... madman CEO, Dov Charney is demanding the firing of employees he deems unattractive and thus detrimental to the "AA aesthetic."

It doesn't take a rocket scientist to know that people (especially in America) are ultra sensitive to negative comments about appearance. It also does not take a great deal of intelligence to recognize that the firing of employees based on their looks is a stupidly discriminatory practice. So, being that this project is being undertaken at the sole direction of CEO Charney, one does not have to spend much time analyzing exactly who is the stupid one over there.

BloggingStocks is a family site, so I will simply note the Reuters headline for this story: Probe fingers 1,800 American Apparel (AMEX: APP) workers.

Now that you have had a moment to make your own joke, we continue with the news -- although I will say that when I saw this headline, I thought that CEO Dov Charney was back to his old tricks.

Anyway, a United States federal probe found that about one-third of the company's LA-area factory workers were not authorized to work in the United States.

We saw at least five directional changes throughout the day in the stock market, so the close still left people wondering what the day really was. The housing data was weaker than expected, and today marked the first day that the VIX went under 30. Here are today's unofficial closing bell levels:

Dow 8,476.36 -27.72 (-0.33%)
S&P 500 908.34 -1.37 (-0.15%)
Nasdaq 1,734.54 +2.18 (0.13%)

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Back in April, I wrote about Wood Allen's decision to file a lawsuit against American Apparel (AMEX: APP). Woody was upset because his image appeared on company billboard that were up for less than one week, and he wanted $10 million in damages. I thought the figure was laughably high and American Apparel lawyers said they did too -- but today The New York Times reports that the matter has been resolved:

On Monday morning, as a trial was set to begin in Federal District Court in Lower Manhattan, Mr. Allen announced that he had accepted a $5 million settlement in his lawsuit against American Apparel and Dov Charney, its founder and chief executive. The settlement means that Mr. Allen, who had initially sought $10 million in the trial, can avoid a trial that could have dredged up potentially salacious details about the filmmaker and his wife, Soon-Yi Previn.

Shares of American Apparel (AMEX: APP) have been poor performers since the company went public through a special-purpose acquisition vehicle, even though the company's same-store sales numbers have been incredibly impressive.

The company's shares have rebounded recently following the announcement of a major investment by Lion Capital. Now CEO Dov Charney is making his first trades in his company's stock since it went public and guess what? He's buying: 855,000 shares for $2.67 million, including 460,000 shares purchased on margin.

American Apparel (AMEX: APP), the fashion company sporting impressive growth along with a bizarre corporate sideshow, has a new chief financial officer.

According to a press release, Adrian Kowalewski has been appointed Executive Vice President and Chief Financial Officer, effective immediately. He's been with the company since 2006, most recently as Director of Corporate Finance and Development. He is only 31 years old. The company's last CFO bowed out not long after CEO Dov Charney publicly blasted him as a "complete loser."

American Apparel's operational growth has been nothing short of phenomenal, but its stock price has been hurt by a lack of professionalism and faith in managerial competence. It's possible that Mr. Kowalewski will do a great job, but let's face it: appointing a 31-year old with little in the way of executive suite experience is not going to get investors breathing a sigh of relief.

Hiring a company outsider with a long track record in the industry would have been the savvier move from a PR perspective, but this is a company that marches to the drum of its eccentric founder.

In my Top 10 Stocks to Avoid in 2009, I suggested that investors stay away from stocks impacted by a handful of specific themes that will play out during the coming year.

Stocks impacted by higher fuel prices, a stronger U.S. dollar, and high defaults in the credit card space should be investment afterthoughts in 2009.

One theme that did not make the list, and probably should have, are companies with so-called debt bombs set to go off at some point during the next year. There are many businesses that have big debts coming due in 2009.

With the credit markets in disarray, the likelihood of obtaining new loans to replace old debt is difficult at best. As such, companies must obtain concessions from bond holders or run the risk of going into default. Whatever scenario plays out, the result is likely to be negative for common shareholders. With so much risk, it makes little sense to venture into stocks with these issues outstanding.

There's plenty of scandal surrounding American Apparel (AMEX: APP) since it went public but, up until now, it's consisted almost exclusively of hallegations of bizarre sexual conduct by the company's founder and CEO Dov Charney.

But a new lawsuit tosses the American Apparel quandary into a whole new category. Roberto Hernandez, a former accountant at the company, is suing (subscription required) for wrongful termination alleging that, in 2006, Charney "demanded that Mr. Hernandez pad the inventory" in attempt to make the company appear more attractive to investors. Hernandez says that he "refused to participate in any scheme to potentially defraud the investors" and was fired on November 9th of that year.

This is second time this month that American Apparel has come under fire over allegations that it sought to mislead investors. On November 4th, I wrote about a lawsuit accusing the company of asking an alleged victim of sexual harassment to participate in an arbitration hearing with a predetermined outcome -- and then plotting to issue a press release declaring victory in the sham hearing.

Here's the question: With American Apparel's stock beaten down so badly in spite of incredibly impressive sales growth, does any of this really matter? Up until now, you might have been able to say that it doesn't. But many investors will want to steer clear of a company with a lawsuit accusing the company's CEO of directing an accountant to cook the books.

The shares fell yesterday after the company reported earnings that were down sharply because of stock-based compensation expenses.

UPDATE: This morning American Apparel released a statement in response to the lawsuit and media reports, calling it a "frivolous and baseless lawsuit recently filed by a disgruntled former employee." The company added that "It is unfortunate that the media continues to focus on sideshows and false allegations. It does a disservice to the 10,000 men and women who make American Apparel such an outstanding company; to our customers who love our products; and to our investors who appreciate our strong financial performance and our dedication to being a leading public company."

Update Nov. 26, 2008: See all 2008 Black Friday deals.

This week, some apparel and accessory producers and retailers offer a look at how they've been doing between early summer's economic stimulus spending and the coming holiday season. While Polo Ralph Lauren Corp. (NYSE: RL) reported higher earnings last week, Coldwater Creek Inc. (NASDAQ: CWTR), Eddie Bauer Holdings Inc. (NASDAQ: EBHI), Kenneth Cole Productions Inc. (NYSE: KCP), and K-Swiss Inc. (NASDAQ: KSWS) all reported net losses as consumers pulled back on spending over the summer due to higher fuel prices and other economic worries. The expectations of analysts surveyed by Thomson Financial for such companies scheduled to report this week don't look much different; i.e., a bright spot or two among lower expectations overall.

Hip retailer Urban Outfitters Inc. (NASDAQ: URBN) is expected to post earnings 22.9% higher than a year ago, to $0.35 per share, on revenue of $475.9 million (+26.4%). The Philadelphia-based company already said that same-store sales in the quarter were 10% higher. Urban Outfitters has beat expectations in recent quarters, by 11.5% in the previous quarter, and analysts on average recommend buying URBN. Shares fell to a 52-week low of $16.61 per share on Friday, and are down 29.5% from a year ago. Other companies expected to report more modest earnings growth in the coming week include watch and accessory maker Fossil Inc. (NASDAQ: FOSL), retail giant Wal-Mart Stores Inc. (NYSE: WMT), and TJX Companies Inc. (NYSE: TJX), parent of such discount retail chains as T.J. Maxx and Marshalls. These three companies have tended to top analysts estimates in recent quarters, and Fossil and TJX ended the week near their 52-week lows.

While Los Angeles-based American Apparel Inc. (AMEX: APP) had a strong second quarter, the casual wear maker is expected to report $0.13 per share earnings for the third quarter, the same as in the year-ago period. And analysts anticipate that Kohl's Corp. (NYSE: KSS) will report that profits fell 16.4% to $0.51 per share on revenue of $3.9 billion (+1.9%). Though same-store sales for October fell 9%, the Menomonee Falls, Wis.-based company reaffirmed its third-quarter forecast. Kohl's has offered positive surprises in recent quarters, topping estimates by 5.6% in the previous quarter. The consensus recommendation remains to buy KSS. Shares have been climbing after reaching a 52-week low in late October, but are still down 32.8% from a year ago.

Even as American Apparel (AMEX: APP) posts incredible sales numbers in an incredibly tough environment, the company can't seem to shake the scandals created by its eccentric CEO Dov Charney who was settled a sexual-harassment claim involving one of his female employees earlier this year.

The Wall Street Journal reports (subscription required) that the company has agreed to pay the employee $1.3 million to settle the claim with one catch -- that she keep the settlement a secret "and instead participate in an arbitration proceeding, with a preordained outcome" so that Charney could publicly declare victory.

The woman refused to participate in the arbitration and the matter ended up in court. Last week, a three judge panel of California's Second Appellate District in Los Angeles said that the woman's alleged breach of the agreement should be reviewed by independent arbitrators.

However, the court added that it was concerned about the "potential illegality of the 'arbitration' clause ... with its goal of issuing a press release for the purpose of misleading journalists and the public."

With the appearance of efforts to mislead investors about the nature of the case, this fiasco moves beyond the realm of the hanky panky that has been part of Mr. Charney's behavior and his company since it went public. Now you have to wonder about integrity.

To say that American Apparel (AMEX: APP) is a unique company is like saying that Tiger Woods is a talented athlete: you have a CEO who receives oral sex from employees during interviews, tells reporters that his company's CFO is a "complete loser," and the company has taken out ads promoting its controversial views on immigrations laws. Then, just for fun, the company is being sued by Woody Allen.

But when you get past all the weirdness, you have a company that reported comparable store sales growth of 25% for July, in one of the toughest environments for retailers in recent memory.

Portfolio reports that American Apparel is making significant investments in advertising on MySpace and Facebook -- social networking sites that target the young, hip demographic that is the company's stronghold. According to comScore's data for April, American Apparel placed 483 million internet display ads -- more than apparel giant Nike!

Many companies have been wary of social networking sites as outlets for ads because, as cool as the users might be, they also tend to be broke. But it's hard to argue with 25% same store sales growth.

Shares of American Apparel are down more than 50% from where they traded as recently as December -- it seems that the market just doesn't have an appetite for a hot retail play right now.

Once you strip the kinkiness out of the American Apparel story, the stock looks cheap -- the question is, how much of the market's skepticism is justified?

Even with the stimulus checks, retail sales numbers for June and July have been nothing to cheer about. And this coming week should provide another look at how things have been shaping up in the apparel and accessories arena. A number of companies are scheduled to release quarterly numbers, from upscale retailer Nordstrom to the parent of discounter TJ Maxx, from hipster Urban Outfitters to global giant Wal-Mart. Here's a look at what Wall Street is anticipating.

Analysts surveyed by Thomson Financial expect the following to report strong earnings growth when compared to the same period of the previous year.

• Urban Outfitters Inc. (NASDAQ: URBN): $0.30 EPS (+36.7%) on revenue of $448.5 million (+28.7%)
• Estée Lauder Cos. Inc. (NYSE: EL): $0.56 EPS (+19.6%) on revenue of $1.9 billion (+9.4%)
• TJX Cos. Inc. (NYSE: TJX): $0.46 EPS (+17.4%) on revenue of $4.6 billion (+6.8%)
• Fossil Inc. (NASDAQ: FOSL): $0.25 EPS (+16%) on revenue of $346.8 million (+13.2%)
• Wal-Mart Stores Inc. (NYSE: WMT): $0.84 EPS (+14.3%) on revenue of $101.7 billion (+9.3%)
• Elizabeth Arden Inc. (NASDAQ: RDEN): $0.22 EPS (+9.1%) on revenue of $237.6 million (-2.1/%)
• Abercrombie & Fitch Co. (NYSE: ANF): $0.93 EPS (+5.4%) on revenue of $872 million (+8.4%)

On Friday morning before the opening bell, American Apparel (AMEX: APP) announced that CFO Ken Cieply -- the main founder and CEO Dov Charney called a "complete loser" -- had resigned. Except they didn't exactly announce that. The headline was American Apparel Announces Hiring of Interim CEO, which is reminiscent of the old joke about NASA needing another seven astronauts. But the market saw through the attempted spin and sent the stock down a few cents.

But American Apparel's spin machine wasn't done. At 2:00 PM ET that same day, the company decided to announce a "$25 Million Share Repurchase Program," which allowed the stock to close up for the day. That press release raised a number of red flags. The reason for its timing was obvious: give investors some good news to go along with the resignation of the CFO. I'm always of skeptical of companies that use buybacks to try to pump up share prices. It's even worse when the company times its announcement of a buyback to pump up its stock price.

Then there's the question of whether Charney and company are really in a position to be buying back stock. American Apparel has a substantial debt load and ambitious expansion plans. I doubt that it's generating enough cash to make a buyback prudent.

Of course American Apparel hasn't committed to buying back stock. It's board of directors has simply said that it can. I'll be surprised if it does but, either way, the company made some PR hay.

On April 12th, I wrote about a Wall Street Journal piece that raised some interesting questions about American Apparel (AMEX: APP): CEO Dov Charney had taken the ambitious step of referring to the company's CFO as a "complete loser", and the company was also dealing with accounting issues, a substantial debt load, and more. The stock took a hit following the Journal piece.

American Apparel didn't issue any public rebuttal but, yesterday afternoon, DealBreaker published a letter sent by to the Wall Street Journal by director Adrian Kowalewski. Kowalewski wrote that "Our lawyers are currently pursuing this matter with News Corporation, so we have not yet issued a public statement." He went on to make the case that the company is in strong financial health and that, furthermore, Mr. Charney doesn't walk around the offices in his underwear, except for that one time, but that was part of a promotional video.

The financial issues and Charney's unconventional personality aside, American Apparel has put up some pretty spectacular growth numbers.

In a related story, Judge Judy is not a fan of American Apparel's racy ads.