Abercrombie Advances After Call for New CEO, Possible Sale

Dec. 4 (Bloomberg) -- Robert Kaplan, management professor at Harvard Business School, discusses activist investors pressuring the Abercrombie & Fitch board to replace CEO Mike Jeffries and the impact of investors on company boards. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

Abercrombie & Fitch Co. gained after investor Engaged Capital LLC urged the teen-clothing retailer to start a search for a new chief executive officer and consider selling the company.

The shares rose 5.8 percent to $35.99 at the close in New York after Engaged Capital said in a letter to Abercrombie’s board that there’s “no qualified successor” to Chief Executive Officer Michael Jeffries, whose contract expires Feb. 1. Jeffries is a “major stumbling block” to a potential sale of the company to private equity, Engaged Capital said.

“The board needs to come to the same conclusion that everyone else already has –- it is time for new leadership at Abercrombie & Fitch,” Glenn Welling, chief investment officer at Engaged Capital, wrote in the letter.

Engaged Capital, a Newport Beach, California-based activist investor, owns about 400,000 shares, or less than 1 percent of shares outstanding.

Jeffries, 69, has been struggling to reconnect with the chain’s teenage customers who have become less enamored of its fashions, half-naked models and noisy stores. Full-year earnings will be as much as $1.50 a share on an adjusted basis, excluding charges, Abercrombie said in a Nov. 5 statement, below the $1.97 estimate of analysts.

The retailer has “had extensive discussions with many of its shareholders, including Engaged Capital, over the past several months,” Mackenzie Bruce, a company spokeswoman, said in an e-mail. “We look forward to continuing our dialogue with shareholders as we execute on our long-term plan.”

Abercrombie, based in New Albany, Ohio, has fallen 25 percent this year, compared with a 26 percent gain for the Standard & Poor’s 500 Index.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.