Abercrombie CEO Search Has Three Executives Duking It OutLindsey Rupp
Abercrombie & Fitch Co., which hasn’t had a CEO in five months, has set up a contest for the job that pits its operations chief against each of its brand presidents.
After the departure of longtime Chief Executive Officer Mike Jeffries in December, the clothing retailer has focused its internal search on Chief Operating Officer Jonathan Ramsden; Christos Angelides, president of the flagship Abercrombie chain; and Fran Horowitz, who oversees the Hollister brand. The company is seeking the leader with the most compelling vision for replacing Jeffries’s raunchy-preppy tone, which has fallen out of favor with teens.
“We’re looking for a very clear strategic perspective,” Arthur Martinez, chairman of the New Albany, Ohio-based company, said in an interview. “We’re moving forward as aggressively as seems prudent. And when we’re ready to make an announcement, we’ll do it.”
Though the company doesn’t have an interim CEO, Martinez is serving as an executive chairman, a more hands-on role. He and Ramsden -- along with Angelides and Horowitz -- are part of a recently formed “office of the chairman,” which is managing day-to-day operations until a new CEO is named. The company also is hedging its bets: It hired executive-search firm Spencer Stuart to review external candidates in case an internal person doesn’t pass muster.
Sitting around a conference table at the company’s suburban headquarters -- which has the feel of a college campus -- the three laughed at the suggestion that competing for the same job is awkward. They’re working as a team to update the brands’ identities and stores, rather than trying to elbow one another aside, Ramsden said.
“Fortunately, we all get along well,” he said. “We all respect what each other brings to the table. Our experience so far has been that we’re very complementary.”
The main challenge is figuring out what Abercrombie wants to be. The chain has toned down its advertising, once famous for shirtless models and suggestive poses, and backed away from clothes emblazoned with conspicuous logos.
But what replaces that? The teen-apparel market has few success stories right now, so it’s hard to tell which direction to go. Though fast-fashion chains like H&M and Forever 21 have thrived, many retailers are struggling and shuttering locations. Wet Seal Inc. filed for bankruptcy in January and was recently sold to a private-equity buyer after closing hundreds of stores.
The three executives vying for Abercrombie’s top job, who are all in their early 50s, are trying to show they can win back the hearts of teen shoppers. Sales at the chain’s established stores have fallen in six of the past eight years. Abercrombie profit shrank 5.1 percent in 2014, and same-store sales tumbled 10 percent last quarter, which included the critical holiday season.
Abercrombie shares have fallen 24 percent so far this year, compared with a 2.8 percent gain for the Standard & Poor’s 500 Index. The stock slipped 1.3 percent to $21.90 at the close of trading Friday in New York.
Angelides, the president in charge of the Abercrombie chain, joined the company last year after a career at the U.K.- based retailer Next Plc. He’d never worked at a North American chain before, making him a newbie to events like Black Friday -- the blowout sales event that follows Thanksgiving. Now he’s traveling around the country visiting stores and learning the localities.
Horowitz, head of the Hollister brand, started at the company in October. She was previously president of Ann Inc.’s casual Loft division and held various positions in merchandising at Express Inc. Though she’s had plenty of experience gauging American shoppers, her current job has her divining the wishes of high schoolers, Hollister’s target customer.
Of the three candidates, the company veteran is Ramsden. He came to Abercrombie in 2008 as chief financial officer and was promoted to the newly created COO role last year. He’s led the company’s charge to cut expenses, including closing more than 100 stores over the past two years.
If one -- or none -- of the three is chosen to become the next CEO, the company risks losing the others to competitors. Abercrombie is aware of that risk, Martinez said. He compared the loss of Angelides, Horowitz or Ramsden to a stool left with too few legs -- an unstable situation.
For now, the arrangement works, he said.
“This is a very functional interim governance situation,” Martinez said. “We aren’t putting things on the back burner.”
Abercrombie also gave Martinez an additional $625,000 retainer and stock grants in April for his expanded role as chairman. That could be a sign the search for a new CEO isn’t close to over, said Dorothy Lakner, an analyst at Topeka Capital Markets.
The company’s leadership team also makes it harder to attract an outside leader, she said. If the current management figures out a winning strategy, an external CEO wouldn’t have much opportunity to craft a vision. Lakner, who has a sell rating on the company, sees Ramsden as the logical choice if Abercrombie sticks with an internal candidate.
In the meantime, Abercrombie needs a top-to-bottom review of its operations, something management seems prepared to do, said Howard Tubin, an analyst at Guggenheim Securities.
“They seem ready, willing and able to leave no stone unturned and look at every aspect of the business,” he said. “But the bottom line is, you’ve got to get goods in the stores that kids want to buy.”