Abercrombie’s Next CEO Needs to Revamp Outdated Brand, AgainLindsey Rupp
Abercrombie & Fitch Co., a former purveyor of safari gear that was reborn as a teen-clothing chain, is searching for its next incarnation.
The company, which announced the departure of longtime Chief Executive Officer Mike Jeffries yesterday, needs a successor who can appeal to today’s teens in an industry suffering from e-commerce competition and shrinking foot traffic. And it will have to emerge from the shadow of a man who has steered the brand for more than two decades.
“He actually was the brand,” said Terre Simpson, president of New York-based executive-search firm Simpson Associates. “Now it’s almost as if they need retail psychotherapy to determine what the brand direction should be.”
Jeffries, 70, stepped down as CEO after the strategies that led to Abercrombie’s success in the 1990s failed to resonate with current shoppers. The chain’s shirtless models, booming music and conspicuous logos have lost their appeal, replaced by a desire for fast fashion and a lower-key selling style.
The new CEO should be someone who understands operations and how to rebuild a brand, said Jena Abernathy, an Atlanta-based senior partner at executive-search firm Witt/Kieffer. The person would ideally come from an innovative retailer such as Hennes & Mauritz AB or even Amazon.com Inc., she said.
“There aren’t that many visionary CEOs out there that really understand how to bring in technology and retail and branding,” she said. “They’ve got to make these brands cool again. It’s going to be hard. You’ve got so many competitors.”
Abercrombie, based in New Albany, Ohio, said it’s also considering internal candidates for the job. The top executive in line is Jonathan Ramsden, who joined the company in 2008 and was promoted to the newly created chief operating officer role in January. Two other candidates: Christos Angelides, who started as president of the Abercrombie brand in November after a career at the U.K.-based clothing chain Next Plc, and Fran Horowitz, a former Ann Inc. executive who became president of Hollister in October.
Like many teen-apparel retailers, Abercrombie began struggling over the past decade, hurt by online rivals and the rise of cheaper alternatives such as H&M. Teens also turned away from clothes with logos emblazoned across the chest and searched for unique styles. As customers defected, Abercrombie suffered 11 quarters of same-store sales declines and a 77 percent plunge in profit last year.
The stock jumped 8 percent yesterday after the announcement, marking the biggest one-day increase in more than nine months. Abercrombie gave back some of that gain today, falling 0.6 percent to $28.29 at the close in New York.
Jeffries will retire immediately from his CEO and director roles. While the board has hired a search firm to identify successors, Abercrombie already has a plan under way for its transformation. Looser-fitting styles and the color black are lining shelves -- a break from tradition. And the company has enlisted teams to help market the brand on social-media sites.
Even with a comeback plan in the works, an outsider could help bring new thinking to the company, said Pam Quintiliano, a New York-based analyst at SunTrust Banks Inc
“They owe it to the shareholder base to look externally as well as internally,” she said.
Jeffries, who worked at several apparel brands before taking the top job at Abercrombie, was recognized for his merchandising skills and knowing his customer. As teen shopping habits changed, however, Abercrombie didn’t.
The company’s next CEO will need to help the company adapt to the rapidly changing industry, Abercrombie Chairman Arthur Martinez said in an interview.
“We’re never going to reinvent Mike Jeffries, and we shouldn’t be trying,” he said. “The next step forward requires someone with somewhat different skills than Mike, and someone who’s acutely aware of the disruption that’s coming in the industry -- the emerging dominance of online and omnichannel retailing -- someone who can strategically navigate those waters.”
The company has rebounded before.
Abercrombie & Fitch was founded in 1892 as a seller of outdoor gear to adventure seekers such as Theodore Roosevelt and Ernest Hemingway. Before Jeffries shifted the brand’s focus to young adults in the 1990s, it was languishing. Abercrombie was reborn as a trendy chain 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.
Topic No. 1
Jeffries’s departure comes exactly a year after he signed his last one-year contract with the company that extended his employment agreement to Feb. 1, 2015.
“The timing is a byproduct of a long process over several months,” Martinez said in an interview. “Succession planning in the boardroom today is topic No. 1. Selection of a CEO is the most important duty a board has.”
Still, the fact that Jeffries retired without a replacement lined up suggests that the company isn’t sure of its next move. That’s troubling, said Walter Jackson, director of advisory services at Marcum LLP, a New York-based accounting and consulting firm.
“Why was there no plan? It seems irresponsible,” he said. “I don’t know who they would get to take this job. It seems like a huge cultural, strategic and organizational challenge.”
(An earlier version of the story was corrected to fix the start date of Ramsden as operating chief.)