Abercrombie & Fitch CEO retires as sales continue to decline

Will the departure of Michael Jeffries, the retailer’s controversial former CEO, help the brand regain audience favor? Analysts think it may not.

“A lot of people don’t belong [in our clothes], and they can’t belong,” former Abercrombie & Fitch CEO Michael Jeffries once told Salon. “Are we exclusionary? Absolutely.”

Tuesday marked the end of such tendentious comments—and branding tactics—as Jeffries announced his immediate retirement.

Though Jeffries’ controversial messaging helped the clothing retailer become a top brand in the late ’90s, it’s a strategy that’s no longer working.

Abercrombie & Fitch has reported 11 quarters of declining sales. In 2013, sales fell 10 percent. Revenues are still dropping. Compared with last year, sales fell 12 percent during the most recent quarter.

The famous statement went viral last year. Jeffries came under fire after he said the reason the brand doesn’t offer XL and XXL sizes for women is because it’s for “the cool kids.” Critics blasted the company’s branding choices. An activist even created an anti-Abercrombie campaign called #FitchTheHomeless because an Abercrombie manager said he’d “rather burn clothes than give them to poor people.”

Eric Beder, a Wunderlich Securities analyst, said the brand displayed a lack of progress, and recent tactics were “too little, too late.”

“The glory days of Abercrombie are long gone, and the once teen giant has fallen, we are unsure when it will be able to rise again,” Beder said, according to The Huffington Post.

“The logo is no longer cool, unless you are a middle schooler in a rural middle school,” University of Michigan assistant professor Erik Gordon told Business Insider.

Twitter responded to the announcement with its usual snark:

Jim Cramer, co-founder and chairman of The Street, said Jeffries’ retirement is a “terrific thing” for the brand, as the former CEO continually created problems. However, Cramer says Jeffries’ temporary substitute isn’t great:

Unfortunately, Arthur Martinez is currently going to be taking over. He was the person who was involved with basically the destruction of Sears. You can say, “Well, it wasn’t his fault,” but obviously, CEOs do matter.

Jeffries, who was also stripped of his title as the company’s chairman in January, leaves with a $27.6 million retirement package (according to Bloomberg) and the following statement:

It has been an honor to lead this extraordinarily talented group of people. I am extremely proud of your accomplishments. I believe now is the right time for new leadership to take the Company forward in the next phase of its development.

However, Jeffries left one more parting gift: the company’s increased stock prices. Bloomberg reports:

The shares jumped 8 percent to $28.46 after the move was announced, marketing the biggest one-day gain in more than nine months. Through yesterday’s close, the retailer’s stock had fallen almost 20 percent this year.

(Image via)

Topics: PR


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