Sexy Sweats Without the Sweatshop

Over the past three years, a new clothing store called American Apparel has been appearing in cities around the country. Nearly 150 new stores have opened, popping up in foreign capitals too, from Montreal to Paris to Tokyo. The company sells simple cotton leisure wear. Much of the apparel is for 20-something "contemporary metropolitan adults" as Dov Charney often calls his market.

"20/20" stopped by an American Apparel store in New York to meet the man who started the company, a fast-talking 37-year-old Canadian, Dov Charney, to learn more about his company.

American Apparel is just a fraction of the size of established retailers like The Gap, but Charney's company has become one of the fastest-growing clothing makers in America. Over the past two years, Charney has opened more than 90 new retail stores. He began by wholesaling just a few styles of blank T-shirts. Now he's expanded his line to include sweatshirts, bathing suits, skirts, jackets and more. Much of it he says appeals to 20-somethings who like their clothes tighter than baby boomers do.

"There's the relaxed fit generation and then there's the next generation," he said. The next generation seems to like their clothing tight, and that's what Charney's giving them. "We like sexy at American Apparel. Absolutely," he said.

He also likes bold colors and has taken a bold approach to how he runs and promotes his company. It's very sexual. He decorates his stores with provocative, sexy images.

Charney says sexiness is all about attitude and style -- and he says he's always on the lookout for people who have it, like Natasha. After he noticed her walking down the street, he jumped out of his limo and asked her to model for his company, which she did. Now she works for American Apparel.

"We walk around the trade shows, looking hot," she explained. "The clothing is tighter. It's sexier. It's that next generation he's talking about," she explained.

Some say Charney's unconventional style is part of what makes the company click. He encourages communication between all levels of his employees, and anyone can walk into the boss's office at any time if they need to talk about a problem or an idea.

Charney's structured his business in a way that allows him to capitalize on it. "We get an idea, you go to a vintage store, snap a picture of a garment that we think is hot and 20, 30 days later, we could have it in the stores," he said.

People like working here, says Charney's creative adviser, Iris Alonzo. "You know, it's like, I wake up in the morning and want to make some crazy sweatshirt and we can actually do it," Alonzo said.

Key to Success? Passion -- and Resilience

By his own admission, Charney has always been a particularly hyper guy. By the time he got to college, Charney says, he found a way to channel all that energy. He started a business, buying shirts at Kmart, and exporting them to Canada. "I started bringing like 5,000, 10,000 T-shirts at a time, on a U-Haul truck in the summer, and I developed a kind of importing business, from the United States to Canada. That's why it's called American Apparel," he said.

Then, he dropped out of college, borrowed $10,000 from his father and moved to South Carolina to manufacture clothes. But after Charney arrived, the rest of the garment industry had discovered it could make clothing much more cheaply overseas. So they did, and Charney's business crashed.

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