On Tuesday morning,
Abercrombie & Fitch
) announced it would be renewing the contract of CEO Michael
Jeffries, a figure who has proven quite controversial over the last
few years, predominantly for comments and policies meant to keep
his company accessible only to "cool kids." Those exclusionary
policies, which included not selling sizes XL or XXL in Women's
clothing, are now being revoked: In November, the company announced
it would expand its offer of sizes, colors, and, most importantly,
fits, by spring 2014. (For more on that, see my story from last
Facing Financial Woes, Abercrombie Will Offer
With the company's stock price having plummeted 26% in the last
year, and with sales continuing to fall, many shareholders were
relieved to find Abercrombie dealing appropriately with the
controversy, but still wanted Jeffries kicked out. As one investor,
Glenn Welling, the Managing Director of Engaged Capital, wrote in
to the Abercrombie board, "Given the Company's history of
operational missteps, taken together with Mr. Jeffries' age 
and his increasingly controversial reputation, the Board must not
let this opportunity pass."
Given Tuesday's news, many shareholders and concerned citizens are
wondering why Jeffries is still the CEO of Abercrombie. We
interviewed several experts to find out.
"The Board Has Been Asleep at the Wheel"
That's what Dave Wakeman, Principal at the
, had to say. He feels the Abercrombie board let a questionable
situation become worse without taking any kind of corrective
action. Wakeman told Minyanville,
The board seems to have found themselves in a position where
they might not have wanted to retain Jeffries, but they also
didn't have any long-term solutions. In a lot of companies, they
might have gone with a short-term placeholder CEO, but my feeling
from having worked in situations where a company is faltering and
leadership needs to be changed is that Abercrombie & Fitch is
having a brand identity crisis and [board members] can't quite
wrap their heads around what they want to be.
The offensive and exclusionary things Jeffries has said are by
no means new: He's been claiming Abercrombie is for the "cool kids"
since the beginning of his tenure, and the board failed to realize
that this might eventually cause a backlash to the company's brand
appeal, and to its stock price, said Wakeman.
Jeffries Made the Company What It Is
When Mike Jeffries became the CEO of Abercrombie & Fitch in
1992, the company generated approximately $50 million in sales.
Today, the company sells in excess of $4 billion annually. That's
obviously a huge amount of growth in two decades, and it has not
gone unnoticed in this time of controversy for the company.
According to Andrew Schrage, founder of the personal finance
website Money Crashers,"At least one of the main directors at ANF
still believes in Jeffries. Craig Stapleton recently stated that
Jeffries has a long-term game plan in place which will use previous
successes for future growth, and that he has taken aim at some of
the specific challenges facing the brand." In fact, Stapleton went
so far as to call Jeffries a "visionary.
Jeffries Is the Cheapest Option Now
Monique Tatum, the CEO of Beautiful Planning Marketing & PR,
believes that financial consideration may also play a part in why
Jeffries has not yet been given the boot. She told Minyanville the
At this point, Mike Jeffries' pay is dependent upon company
earnings. I honestly believe that they see an opportunity where,
at this point, with the declining stock price, it is apparent
that they may not make those sales, and that they have him in
position for very low cost. Also the company has received more
press, though negative, than it has in recent years.
Tatum does acknowledge, however, that the savings the board is
making on its CEO are likely not worth the negative impact on the
brand. As she told us, "Renewing his contract does scream to the
public that they indeed agree with his previous comments and public
viewpoints of who the company cares about as customers."
Is the Company's Demographic Less Outraged Than the
Dave Wakeman suggested to Minyanville that Abercrombie consumers
are perhaps responding with less outrage to Jeffries' statements
than the general media because they don't find his ideas or
opinions offensive. "A&F did an exceptional job of marketing
themselves to a certain consumer within a certain age bracket that
might find Jeffries' view consistent with their own world view," he
told us. Then again, Wakeman also added that Jeffries' behavior is
bully-like, and that our society is now "very focused on any type
of bullying or perceived bullying behavior." Teenagers may be
narcissistic, but Wakeman believes that even they are more critical
of bullying now than they once were. He suggests that the
proliferation of social media may have something to do with this,
but that's a topic for another story.
Everyone we spoke with agreed that Abercrombie cannot simply offer
larger sizes and hope to improve its sales, but it must embrace a
real sense of inclusion for new consumers. As Andrew Schrage told
us, the company "has taken a few steps in the right direction -- it
recently held meetings with leaders of an eating-disorder
organization as well as a teen empowerment group, but it will need
to continue to ramp up efforts in that area if it plans on being
around for the long haul."
Dave Wakeman believes that a true remodeling of the company and
its demographic will ultimately prove impossible for the current
leadership. "They've always been a brand that portrayed a
narcissistic world view that's just not in line with expanding
their size offerings," he said. He feels any significant shifts in
Abercrombie's business will have to happen without Jeffries and the
rest of the company's current leadership.
The board of Abercrombie seems to agree with him: The heads of the
company's three main brands are being replaced, and a major part of
Jeffries' new contract stipulates that there must be a succession
plan for a new CEO in place within the next few years.
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