Jeffries leaves Abercrombie after overseeing rise and fall

Published 1:31 pm Tuesday, December 9, 2014

Bloomberg News.

NEW YORK – Abercrombie &Fitch Co. Chief Executive Officer Mike Jeffries, who turned the retail chain into a hot teen-apparel company in the 1990s before it lost luster in recent years, is stepping down.

Jeffries will retire immediately as CEO and a member of the board, the New Albany, Ohio-based company said Tuesday in a statement. The board is now seeking a replacement for Jeffries and has enlisted an executive-search firm to identify both internal and external candidates.

Jeffries, 70, came under fire after the Abercrombie and Hollister clothing lines lost its cachet with teenage shoppers, leading to declining same-store sales and tumbling profit. Abercrombie had already stripped Jeffries of his chairman role earlier this year. It created a new chief operating officer job and named four new independent directors to its board as part of a deal with Engaged Capital, an activist investor that sought changes at the company. The retailer also hired two executives to head up the Abercrombie and Hollister brands.

“Back when they announced they were going to be having brand presidents, when they said they were going to have a chairman, it was all leading to this,” said Simeon Siegel, a New York-based analyst at Nomura Holdings. “As opposed to answering an activist by throwing a CEO to the curb, they basically allowed him to retire with dignity.”

As part of Tuesday’s changes, Abercrombie &Fitch’s nonexecutive chairman, Arthur Martinez, will become executive chairman. The board has created an office of the chairman that will include Martinez, as well as Chief Operating Officer Jonathan Ramsden, Abercrombie brand President Christos Angelides and Hollister brand President Fran Horowitz. The team will manage the company’s strategy and day-to-day operations until a new CEO is named, Abercrombie said.

“It has been an honor to lead this extraordinarily talented group of people,” Jeffries said in the statement. “Now is the right time for new leadership to take the company forward in the next phase of its development.”

Abercrombie &Fitch was founded in 1892 as a purveyor of outdoor gear to adventure seekers such as Theodore Roosevelt and Ernest Hemingway. In the 1990s, Jeffries shifted the company’s focus to young adults and became known for its jeans, polos and T-shirts emblazoned with a moose logo. The company expanded with the Southern California-style Hollister apparel stores and Gilly Hicks lingerie shops.

Like many teen-apparel retailers, Abercrombie began struggling over the past decade, hurt by dwindling mall traffic and the rise of fast-fashion chains such as H&M.

Once one of the best-paid CEOs in retail, Jeffries saw his compensation shrink 72 percent last year. His total pay was $2.24 million in fiscal 2013, which ended Feb. 1. That was down from $8.16 million in the previous year and $48.1 million in fiscal 2011.

Jeffries didn’t receive any performance-based bonuses in fiscal 2013, accounting for much of the reduction in his total compensation. He also didn’t get a cash bonus or any equity awards because the company failed to achieve financial targets and its stock performed poorly, Abercrombie said in a May filing.

Even if Jeffries’s departure was telegraphed, the timing – right before the crucial holiday season – is puzzling, Siegel said.

“Last quarter’s results were disappointing,” he said. “Maybe they feel that as they push on with growth and the next leg of the business, it’s time for a change.”