Announcing a major change in its corporate governance,
Ohio-based teen apparel retailer
Abercrombie & Fitch Co.
) yesterday relieved its present Chairperson and Chief Executive
Officer (CEO), Mike Jefferies, from his duties as Chairman. The
move is a result of continued pressure from activist investor,
Engaged Capital LLC, to reduce Jefferies' hold on the
After joining Abercrombie & Fitch in 1992, Jefferies went
on to make the company a trendy premium brand for teenagers from
merely a sports brand. However, he failed to adapt it to the
changing retail environment, which consequently led the company
to lose its market share to other teen retailers like Forever 21
and Inditex's Zara.
Jefferies has also faced criticism over his comments on the
type of customers that the company is keen on attracting as it
does not provide merchandise for plus size people. Investors also
voiced their concern regarding his strategies, which were focused
primarily on slashing costs rather than improving the top
The company has appointed Arthur C. Martinez, former board
), as Non-Executive Chairman. Martinez possesses considerable
experience in the field, having worked with companies like Sears,
Roebuck and Co., American International Group Inc.,
IAC/Interactive Corp., Fifth & Pacific Companies Inc.
(formerly Liz Claiborne), International Flavors & Fragrances
Inc. and HSN Inc.
Apart from this, management has appointed two other members to
its board, thereby increasing the strength to 12. The additional
members are Terry Burman and Charles R. Perrin.
Currently, Mr. Burman is the Chairman of
) and has commendable expertise in the retail industry. Earlier,
he was appointed to the boards of Barry's Jewelers Inc., Caesars
World Inc., Unimax Corporation and Yankee Candle Co. He has also
served as the CEO of Signet Jewelers Ltd.
Perrin is on the board of
Campbell Soup Co.
), and has earlier served other majors companies like Avon
Products Inc., Duracell Inc., Eastern Mountain Sports Inc. and
Warnaco Group Inc.
Abercrombie & Fitch has long been grappling with the
decline in its top and bottom lines. The company posted
disappointing sales results in third-quarter 2013, marking
lower-than-expected sales for the fourth straight quarter.
Moreover, the company's comparable-store sales for the quarter
registered its third consecutive double-digit fall.
Observing this, in Dec 2013, Engaged Capital urged the company
to separate the roles of Chairman and CEO, and look for a new
CEO. In addition, the investor advised cancellation of the
shareholder right plan, also known as poison pill, and keeping
options open for a takeover by private equity firms.
In response to the views of Engaged Capital, the company
declared the change in its corporate governance while doing away
with the poison pill as well. The poison pill reduces chances of
gaining control over a company by any person or group through
accumulation of shares in the open market without appropriately
Investors cheered over the company's recent announcement, as
was reflected in its share price that gained 4.8% and closed at
Currently, Abercrombie & Fitch carries a Zacks Rank #2
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