Michael S. Jeffries may have been the kewlist suit in retailing way back in the aughts but if there’s one thing in fashion that’s constant, it is that it flip-flops. Jeffries yesterday was stripped of his chairman’s title at Abercrombie & Fitch as the retailer announced yet another quarter of declining sales and staved off a demand by an activist investor that he be jettisoned entirely. He remains CEO.
Former Saks and Sears executive Arthur Martinez was appointed non-executive chairman and added to the company's board along with two other outsiders, former Avon CEO Charles Perrin and Zale Chairman Terry Burman. A&F also “terminated” its shareholder rights plan — a “poison pill” provision aimed at blocking hostile buyout bids.
Jeffries “has been credited for masterminding the retailer’s rise and then overseeing its descent,” writes the New York Times’ Michael de la Merced. “He has made his share of clumsy comments, including publicly saying he wanted to chase only ‘the cool kids’ and admitting his company was exclusionary.”
Jeffries became CEO of Abercrombie in 1992 when it was a division of The Limited known more for its tweedy past as a retailer of high-end fishing gear than as a purveyor of teenage heat. He was named chairman in 1996.
He “is credited with turning the century-old retailer into a powerhouse in the teen segment that sold jeans and T-shirts with a big helping of sex,” write Joann S. Lublin and Lauren Pollock in the Wall Street Journal. “That attitude infuses Abercrombie — its investor-relations web page features a photo of a young shirtless man — but Mr. Jeffries has sparked controversy with comments about hiring attractive sales staff and gearing products toward thinner shoppers.”
Most controversial to investor types, however, has been the slippage in sales.
“Over the past seven quarters, the retailer has reported increases in comparable-store sales only once — by 1% — and flat sales once,” reports Tim Feran in the Columbus Dispatch. “Such sales fell 14% in the last quarter.”
Jeffries “has faced criticism for failing to stop the once-edgy retailer from ceding market share to ‘fast fashion’ chains such as Forever 21 and Inditex's Zara over the past couple of years,” write Reuters’ Aditi Shrivastava and Devika Krishna Kumar.
In December, shareholder Engaged Capital called on the A&F board to replace Jeffries when his contract expires in February and to consider selling the company to a private equity firm, as Seeking Alpha reported.
“While a good first step, we believe these reactive changes alone will not be sufficient to put the company back on a course towards creating shareholder value," Glenn Welling, Engaged Capital's CIO, said yesterday.
He has been a veritable fount of quips that are quirky at best and offensive at worst. “Dude, I'm not an old fart who wears his jeans up at his shoulders,” the then-61-year-old told Benoit Denizet-Lewis, who infiltrated Abercrombie & Fitch’s 300-acre headquarters — although it prefers “campus” — in the Ohio countryside near New Albany and wrote about it for Salon in 2006.
“Are we exclusionary? Absolutely,” he also told Denizet-Lewis. “Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla.”
But we are not here to chasten Jeffries by his own words. For that, you may consult the compilations of his quotes by About.com’s retailing guide, Barbara Farfan, or by Eddie Cuffin in Elite Daily (“The Voice of Generation-Y”).
Jeffries was to the retail born. “He grew up in Los Angeles, California ,where his father owned Party Time, a chain of party supply stores, according to his Wikipedia entry. “By the age of 12 his father was allowing him to choose the merchandise for the stores' toy departments.” He developed those instincts at Claremont McKenna College, Columbia Business School and the London School of Economics and Political Science.
But that’s long behind him. Analysts generally applauded yesterday’s first moves toward new management, and its stock jumped 4.8%.
“We continue to believe the company remains in the very early stages of a long-term strategic restructuring,” Barclay’s Capital analyst Matthew said in a note quoted by the Columbus Dispatch’s Feran.
Reports the Los Angeles Times’ Tiffany Hsu: “The company has recently suffered because its ‘preppy logoed positioning’ has ‘fallen out of favor with its core customer’ and also because it had relied on ‘poor strategy driven by entrenched management that is unwilling to change,’ wrote Macquarie Capital analyst Liz Dunn in a note to clients. The changes ‘could be significant in providing fresh perspective on management’s strategic direction,’ she wrote.”
“I really don't care what anyone other than our target customer thinks,” Jeffries said in the Salon interview, which he apologized for when some of it more graphic quotes resurfaced last year.
He now has someone else to listen to.