Controversial CEO leaves Abercrombie & Fitch
Mike Jeffries, who is widely credited with the rise of Abercrombie & Fitch in the 1990’s and blamed for its fall in recent years, has stepped down as CEO of the company.
Mr. Jeffries has taken heat in recent years for the chain’s poor performance, which includes nearly three straight years of same-store sales declines. The chain, according to critics, failed to keep up with the ever-changing fashion tastes of its core consumer market and fell behind more nimble fast-fashion chains.
Mr. Jeffries also courted controversy for his emphasis on marketing and hiring that fit A&F’s "beautiful people" image. "Good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t market to anyone other than that," he told Salon in 2006.
The sudden departure of Mr. Jeffries was not a total shock to A&F watchers. The board made the decision in January to take the chairman title from him. It also created a new position of chief operating officer and added executives to run the A&F and Hollister businesses.
Wall Street reacted positively to the news with shares rising eight percent.
A team of people led by Arthur Martinez, A&F’s executive chairman, will manage the day-to-day business of the company until a new CEO is named to lead. Others on the team include Jonathan Ramsden, chief operating officer for the company, Christos Angelides, brand president of A&F, and Fran Horowitz, brand president of Hollister.
"Going forward, we are confident in our talented senior leadership team and the steps we are taking to revitalize our brands and business," said Mr. Martinez. "We are also confident that our search will identify a new leader with the skills and expertise to enable Abercrombie & Fitch to capitalize fully on its growth opportunities and build shareholder value."
- Abercrombie & Fitch Announces Leadership Changes – Abercrombie & Fitch Co.
- Abercrombie CEO Leaves Chain After Overseeing Rise and Fall – Bloomberg News
- Abercrombie CEO Jeffries steps down as company seeks new look – Reuters
- A&F splits CEO and chairman roles – RetailWire
- A&F apologies to plus-size consumers – RetailWire
- Should A&F court girls its CEO finds unattractive? – RetailWire
Discussion Questions
Do you agree that it was time for Mike Jeffries to leave Abercrombie & Fitch? What will the chain need to do to reverse its current fortune?
It may not have been necessary for him to leave but it was necessary to change the merchandise and the merchandising. It is another generation of young shoppers who they missed preparing for in time. Just look at what has happened to Gap. It is important to stay current with the product as well as knowing what is in style for each new generation which changes every 10 years or so. Yes, having missed a change in generational style and not having reacted to it, it is time for Mike to move on while the company looks for someone who knows what the shopper base needs.
I just hope I’m never the CEO of a company that becomes more valuable when I leave!
Dr. Peter Robertson wrote a hugely insightful book titled “Always Change a Winning Team.” The concept is that a different kind of leader is needed at each stage of the organization’s life cycle. The leader that launches a company rarely can actually build it. The leader who stabilizes a company rarely can transform it, etc. As we all know, these stages are inevitable and unavoidable. The trouble often is that companies hire a CEO suited for the stage the company is currently in rather than the stage it needs to move toward. Mike Jeffries seems to have been a great leader for a specific stage.
Mike Jeffries clearly overstayed his due. The RetailWire discussion yesterday reaffirms that the shift in teen lifestyle and spending behavior has not occurred overnight and represents a major structural change. Jeffries was unable to recognize that, and the company suffered. An unwillingness to change and complete obliviousness to his—and the company’s—insensitivity was his downfall.
Although new leadership is a start, it’s going to be a long haul to repair the damage and the stigma A&F has among younger consumers.
The key here is how do you differentiate, be relevant and be affordable? They are removing the logo from their clothes, yes, but what makes an A&F polo different than one from H&M, for example? Is someone willing to pay three times as much for it anymore? The brand has been around since 1906, it would be sad to see a long-established brand not find itself. Good luck to them.
Richard Hernandez hits it on the head. It’s going to be tough to go head-to-head with Forever 21 if your merchandise is five-to-eight times more expensive. If you can buy a great pair of jeans for $12 at Forever 21, why go elsewhere?
This isn’t a rhetorical question, it’s a real one that the executives and boards of other teen retailers will have to contemplate.
I usually stand alone with this position, but I think Jeffries was brilliant. Especially from ’95 to ’05. Think of the gutsy retail chances he took with things like models in the door, a club-like store atmosphere (basically saying, “We don’t want you in here, mom and dad!”), Bruce Weber’s super-hot photography, extreme quality, brand ‘maga-loges’, the whole “regular price brand” positioning, and of course, the fake controversy T-shirts that got them on the front page of the NY Times every month.
Now, you may not like some of those things, but the customer did. During that 10 year period, they were THE premium youth brand, and it was all designed by Jeffries. Turns out his ultimate flaw was inflexibility, especially in terms of merchandise, and in the end, it caught up with him. Too bad, he will be missed (by some).
It’s also another clear marker pointing to the end of an era: that being the “mad-genius merchant” era. Where gut ruled the day and brand was more important than the numbers. That is all gone now with our CEO-CFO hybrids and MBAs galore atop the retail flags. But hopefully soon, the importance of just plain good taste and the guts to experiment will return to store and merchandise level. With the dominance of e-commerce and the imminent mass closing of boring stores, we’re going to need them.
Like many of today’s retail leadership, Mr. Jeffries was driven to build his company, Abercrombie & Fitch, under the guidelines of his “vision.” Unfortunately the market didn’t see their needs and wants being met by A & F.
The successful 21st century retail leadership must understand that they serve the market and cater to customers within the framework of an economic downturn and the fast pace and all telling of e-commerce. A good candidate might be recognized as the one that closes their eyes and mouth long enough to listen to everyone, as in consumers, vendors, investors, the competition and employees, regardless of how they look, that can offer constructive input for the needs of building the company.
A close look into the powers that now exist in A & F will demonstrate the makings of an endorsement for another visionary instead of a sales person. Time will tell.