Abercrombie & Fitch Co. (ANF), a teen apparel retailer struggling to reverse a secular downtrend in sales, got some rare good news today, if ANF stock is any indication.
ANF shares were up some 6% Tuesday as Wall Street cheered the exit of controversial CEO Mike Jeffries.
The announcement that Jeffries — who became CEO in 1992 — would be retiring from this CEO role and giving up his board position came this morning in a press release.
ANF stock has suffered recently under Jeffries’ leadership; shares are off 15% in 2014, and are nearly 65% off their 2011 highs.
Of course, Jeffries alone can’t be blamed for Abercrombie’s miserable performance in the stock market. Most major teen retailers of yesteryear have been off their game: American Eagle Outfitters (AEO) stock is down about 13% in 2014 and recently got hammered after soft holiday sales projections. Meanwhile, Aeropostale Inc (ARO) has plunged 75% so far this year, and took a major hit after forecasting heavy losses in the all-important holiday quarter.
The Controversy of Mike Jeffries
However, while Jeffries can’t be held accountable for fickle teen consumers deeming the Abercrombie & Fitch brand out of style, he can be held accountable for the words that come out of his mouth.
About a year ago, ANF stock jumped 6% on the mere possibility that Jeffries would be stepping down after the activist investing fund Engaged Capital pushed for his ouster. InvestorPlace Managing Editor Kyle Woodley explained then why customers, investors, and normally disinterested third parties alike were up in arms with now-former CEO Michael Jeffries:
“Most notably, Michael Jeffries came under fire when comments from a 2006 Salon interview were dredged up by Business Insider. Jeffries said they ‘want to market to cool, good-looking people. We don’t market to anyone other than that.’ The renewed media outrage caused ANF to backpedal and begin offering plus sizes.”
Woodley also pointed out other inflammatory comments, such as “Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla” and “You don’t alienate anybody, but you don’t excite anybody, either.”
It appears that coup-in-the-making a year ago has finally come to fruition, and not a day too soon.
Abercrombie’s current non-executive chairman of the board, Arthur Martinez, will become executive chairman and oversee day-to-day operations at the retailer while the company searches for a new CEO.
It presumably will begin by looking for a candidate who doesn’t have a penchant for putting his foot in his mouth.
As of this writing John Divine, did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid.