- Martinez says retailer's performance has been "encouraging"
- Abercrombie brand head Angelides fired; Horowitz promoted
Abercrombie & Fitch Co. Executive Chairman Arthur Martinez said the company is no longer actively searching for a CEO, leaving the teen-clothing retailer run by a group of executives that have shared power for more than a year.
“Given our encouraging performance, the board believes we’re on the right track and we intend to continue with the current governance structure,” Martinez said in a statement to Bloomberg. "We are not actively conducting a search for a CEO at this time."
The announcement shows Abercrombie is content to continue with a management structure that divides power among a handful of its top executives. When longtime CEO Mike Jeffries stepped down a year ago, the company created an Office of the Chairman, originally comprising Martinez, Chief Operating Officer Jonathan Ramsden, Hollister brand President Fran Horowitz and Abercrombie brand President Christos Angelides.
That leadership group got streamlined Tuesday, when Abercrombie announced that Angelides has been fired and that Horowitz will assume the newly created position of chief merchandising officer. Horowitz will report to Martinez and be responsible for all customer-facing activities at all of the company’s brands, New Albany, Ohio-based Abercrombie said in a separate statement Tuesday.
Horowitz, Ramsden and Angelides all had been considered internal candidates for the CEO job when the company announced its search along with Jeffries’s resignation. As recently as Nov. 20, Abercrombie said in its earnings statement that it was “currently involved in a selection process for a new chief executive officer and if this selection process is delayed our business could be negatively impacted.”
The latest announcements may signal that Horowitz is edging closer to the CEO role, said Simeon Siegel, an analyst at Nomura Securities.
“The statement that they’re not looking is an implication that they’ve picked and they’re giving her time to earn the top spot,” said Siegel, who has a neutral rating on the shares. “It goes back to the bigger question of who’s supposed to run a retailer these days. Is it supposed to be a merchant or an operator?”
So far, the retailer is “on track” to meet its profit and comparable-sales expectations, Martinez said in the statement today. The company said Nov. 20 that it expects same-store sales in the fourth quarter to be little changed.
Abercrombie rose as much as 6.7 percent to $27.24 in New York after the changes were announced. The shares had slid 11 percent this year through Monday.
Abercrombie said in a filing that Angelides’s employment with the company was terminated without cause. He’ll receive his base salary for 18 months, totaling about $1.49 million, along with $4 million related to the forfeiture of an equity replacement grant. Angelides also will get a prorated portion of his annual cash incentive.
While the company didn’t give a reason for Angelides’s firing, the slower improvement at the Abercrombie division may have figured into the decision, said Howard Tubin, an analyst at Guggenheim Securities.
“Since Mike Jeffries left, I wouldn’t say things are great, but they’re moving in the right direction, and they’re moving more quickly at Hollister,” said Tubin, who has a neutral rating on the shares. “Maybe they can take Fran’s expertise and apply it at both brands instead of continuing on the current track.”
Still, Abercrombie now faces its second search for brand presidents in a little more than a year and remains without a CEO to set a vision for its future.
“The company has unwound what they put in place just last year, and it remains to be seen which avenue is the right route,” Siegel said.