Abercrombie & Fitch Investor Engaged Capital Demands The Change Of CEO

by Trefis Team
+46.53%
Upside
20.09
Market
29.44
Trefis
ANF
Abercrombie & Fitch Co.
Rate   |   votes   |   Share

Shares of teen apparel retailer Abercrombie & Fitch (NYSE:ANF) rose by more than 6% after an investment firm, Engaged Capital suggested the company change its CEO. In its letter to the company’s board, the firm highlighted the expiration of current CEO Mike Jeffries’ contract in February and said that the retailer has suffered from many years due to his poor leadership. Engaged Capital said that the company should also consider selling its business to a private equity firm. [1] However, the investment firm holds just 0.5% stake in Abercrombie and will require greater investor support to have an influence over the company’s board. [2]

For some time now, Abercrombie has been losing its customers to other brands due to weak inventory management and lack of prevailing fashion trends. Some analyst even feel that the company has lost its teen appeal altogether. Moreover, its public relations (PR) have suffered lately as Mike Jeffries was associated with some negative headlines. However, it appears that Mr. Jeffries is under pressure mainly due to the company’s bad performance.

Abercrombie’s management did not make any specific comments related to the letter, but stated that it has had active conversations with many investors over the past several months. [1] We believe that even though Mike Jeffries has made some valuable contributions to the company in the past, a change in leadership might not be the worst idea. A fresh mind might be able to formulate some new strategies, that can help Abercrombie recover from its slump.

Our price estimate for Abercrombie & Fitch stands at $40, implying a premium of about 15% to the market price.

See our complete analysis for Abercrombie & Fitch

Engaged Capital Wants A New CEO

In its letter to Abercrombie’s board, Engaged Capital said that the company has struggled of many years due to its leader’s mismanagement. The letter stated that over the last decade, the company’s management had been investing heavily on expanding its domestic footprint. They overbuilt their U.S. store base and had to consolidate that network later. Abercrombie will close about 30% of its domestic store fleet by the end of this year and will take this figure to 35% by 2015. Management invested similarly in building its store base in Europe, that later turned out to be a bad decision. These stores were costly and have been performing poorly for some time now. Additionally, the retailer’s new brands Ruehl and Gilly Hicks were costly failures. [3]

The investment firm said that poor leadership was more responsible for this under-performance than weak asset quality. It said that the change of CEO is no longer an option, but an absolute necessity given the company’s history of operational missteps, Mr. Jeffries age (69)  and increasingly controversial image. Lately, Jeffries has faced a lot of media criticism for his “cool kids” statements (in response to criticism that the store did not stock larger sizes), and reports of his life partner’s involvement in corporate decision making.  This has added company’s bad PR. [4] The letter said that Mike Jeffries’ public statements and the apparent intrusion of his private life in the company’s business have caused unnecessary controversy, which is damaging the brand image, employee morale and likely sales. The investment firm also said that renewing Mike Jeffries’ contract will be a direct contradiction of what the shareholders want.

Going Private Was Also Cited As An Option

Engaged Capital even said that if the CEO is not changed, the company should consider putting itself for sale to a private equity firm. During the last three years, Abercrombie’s stock has posted the worst performance by any consumer company in S&P’s 500 index and its market capitalization has fallen close to $4 billion to the present $2.7 billion. Though a buyout appears to be a viable option, Engaged Capital feels that Jeffries’ presence will be a major roadblock for the transaction. [5] According to FBR & Co., takeover bids might not be high enough to convince Mr. Jeffries to sell the company. [6] Hence, we believe that Engaged Capital will need broader support from the investors for either a buyout or the change of CEO.

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. Abercrombie Advances After Call for New CEO, Possible Sale, Bloomberg, Dec 3 2013 [] []
  2. Engaged Capital’s Letter To Abercrombie & Fitch []
  3. Engaged Capital Tells Abercrombie: Replace CEO, The Wall Street Journal, Dec 3 2013 []
  4. Exclusive: Abercrombie Execs Troubled By Involvement Of CEO’s Partner, Buzz Feed, May 22 2013 []
  5. Active Investor: Abercrombie & Fitch Should Boot CEO Jeffries, Forbes, Dec 3 2013 []
  6. Abercrombie Holder Faces Off With Anti LBO CEO: REAL M&A, Businessweek, Dec 4 2013 []
Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Abercrombie & Fitch Co. Logo
  • commented 3 weeks ago
  • tags: ANF AEO ARO
  • burberry outlet, http://burberry.outletnow.net/

    christian louboutin outlet, http://christian.louboutin-outlet.net/

    tory burch sandals, http://toryburch.salesandals.net/

    abercrombie and fitch, http://www.abercrombieand-fitch.com.co/

    abercrombie and fitch, http://www.abercrombiefitch.us.com/

    abercrombie, http://www.abercrombie-kids.us.com/

    nike huarache, http://www.air-huarache.co.uk/

    air jordan, http://www.airjordans.us/

    air jordan shoes, http://www.airjordanshoes2015.com/

    nike air max 2015, http://www.airmax-2015.org/

    air max, http://www.airmax-90.org/

    babyliss pro, http://www.babyliss-pro.net/

    basketball shoes, http://www.basketballshoes.com.co/

    beats by dre outlet, http://www.beatsbydrdre.co.com/

    beats by dre, http://www.beatsbydre.com.co/

    monster beats outlet, http://www.beats-by-dre.com.co/

    beats headphones, http://www.beatsheadphones.in.net/

    bottega, http://www.bottega.us/

    burberry outlet online, http://www.burberryhandbags.net.co/

    burberry, http://www.outlet-burberry.in.net/

    burberry outlet, http://www.burberryoutlet.org.uk/

    burberry factory, http://www.burberry-outletonline.com.co/

    burberry, http://www.burberryoutlet-online.in.net/

    cheap calvin kleins, http://www.calvinklein.co.com/

    celine handbags, http://www.celinebags.org/

    chanel handbags, http://www.chanelhandbags.net.co/

    easton bats, http://www.cheap-baseballbats.net/

    christian louboutin shoes, http://www.christianlouboutinshoes.ar.com/

    nfl jerseys, http://www.cheapjerseys.in.net/

    cheap jordans, http://www.cheap-jordans.net/

    cheap michael kors, http://www.cheapmichaelkors.us.org/

    nike shoes, http://www.cheap-nikeshoes.net/

    cheap oakley sunglasses, http://www.cheapoakley.us.org/

    cheap oakley , http://www.cheapoakleysunglasses.ar.com/

    cheap oakley sunglasses, http://www.cheap-oakleysunglasses.in.net/

    cheap ray ban, http://www.cheaprayban.com.co/

    boots on sale, http://www.cheapshoes.com.co/

    cheap ugg boots, http://www.cheapuggboots.eu.com/

    flat iron, http://www.chiflatiron.net.co/

    christian louboutin, http://www.christian--louboutin.in.net/

    louboutin shoes, http://www.christianlouboutin.org.uk/

    christian louboutin shoes, http://www.christianlouboutinshoes.jp.net/

    coach outlet online, http://www.coachfactory-outlet.co.com/

    coach factory, http://www.coachfactoryoutletonline.co.com/

    coach outlet usa, http://www.coach-handbags.com.co/

    coach outlet, http://www.coachoutlet-online.com.co/

    coach store online, http://www.coachoutletstore.net.co/

    coach outlet, http://www.coachoutletstore-online.com.co/

    chanel sunglasses, http://www.coco-chanelbags.com.co/

    converse shoes, http://www.converse.net.co/

    coach handbags, http://www.designerhandbagsoutlet.com.co/

    eyeglasses online, http://www.eyeglassesonline.us.com/

    eyeglass frames, http://www.eyeglassframes.us.com/

    burberry clothes, http://www.fashion-clothing.us.com/

    salvatore ferragamo, http://www.ferragamo.com.co/

    ferragamo shoes, http://www.ferragamoshoes.net/

    hair straightener, http://www.ghdhairstraightener.com.co/

    gucci shoes outlet, http://www.gucci.me.uk/

    gucci handbags, http://www.guccihandbags.net.co/

    gucci factory, http://www.gucci-outlet.in.net/

    gucci outlet, http://www.gucci--outlet.com.co/

    gucci shoes, http://www.guccishoes.net.co/

    gucci shoes, http://www.guccishoes.us.org/

    hermes, http://www.hermesbags.com.co/

    hermes birkin, http://www.hermesbirkin.com.co/

    hermes outlet online, http://www.hermesoutlet.net.co/

    hollister, http://www.hollister.us.org/

    hollister clothing, http://www.hollisterclothing-store.in.net/

    insanity workout, http://www.insanityworkout.net.co/

    iphone cases, http://www.iphone-cases.us/

    jimmy choo, http://www.jimmychoo.net.co/

    jordan retro, http://www.jordanretro.org/

    jordan shoes, http://www.jordan-shoes.com.co/

    juicy couture outlet, http://www.juicycouture.com.co/

    juicy couture handbags, http://www.juicycoutureoutlet.net.co/

    kate spade, http://www.kate-spade.com.co/

    kate spade handbags, http://www.katespade-outlet.com.co/

    kate spade outlet online, http://www.kate-spades.com/

    longchamp, http://www.longchamp.us.org/

    longchamp handbags, http://www.longchamp.com.co/

    louboutin, http://www.louboutin.jp.net/

    louis vuitton canada, http://www.louis-vuittoncanada.ca/

    louis vuitton bags, http://www.louisvuitton.jp.net/

    louis vuitton, http://www.louis--vuitton.org.uk/

    vuitton handbags, http://www.louisvuitton.so/

    louis vuitton outlet online, http://www.louisvuittonas.com/

    louis vuitton, http://www.louisvuitton-outlet.com.co/

    louis vuitton, http://www.louisvuitton-outlets.us/

    marc jacobs handbags, http://www.marcjacobsonsale.com/

    mcm bags, http://www.mcm-bags.net/

    mcm backpack, http://www.mcmhandbags.com.co/

    michael kors, http://www.michaelkors.so/

    cheap michael kors, http://www.michael--kors.us.com/

    michael kors bags sale, http://www.michaelkorsbags.us.org/

    michael kors, http://www.michaelkorshandbags.org.uk/

    michael kors outlet online, http://www.michael-kors-handbags.us.com/

    michael kors outlet, http://www.michaelkorsoutlet.ar.com/

    michael kors outlet, http://www.michael-kors-outlet.us.org/

    michael kors outlet online, http://www.michaelkorsoutlet-online.ar.com/

    michael kors outlet online sale, http://www.michael-kors-outlet-online.us.org/

    michael kors outlet store, http://www.michaelkorsoutletonline-sale.us.com/

    michael kors uk, http://www.michaelkors-uk.org.uk/

    mont blanc pens, http://www.montblanc--pens.net/

    new balance, http://www.newbalance-outlet.org/

    nike air max, http://www.nike-air-max.us/

    nike factory, http://www.nikefactory.org/

    nike free, http://www.nikefree5.net/

    nike free run, http://www.nikefree-run.net/

    nike free, http://www.nikefree-run.org.uk/

    air jordans, http://www.jordanrelease-dates.com/

    nike mercurial, http://www.nikemercurial.net/

    nike roshe, http://www.nikerosherun.us/

    nike outlet store, http://www.nikestore.us/

    north face, http://www.northface.us.org/

    north face clearance, http://www.northfaceoutlet.com.co/

    oakley outlet, http://www.oakleyoutlet.us.org/

    oakley sunglasses, http://www.oakley-sunglasses.us.org/

    oakley sunglasses cheap, http://www.oakleysunglassescheap.in.net/

    oakley sunglasses, http://www.oakleysunglassesoutlet.com.co/

    omega watches, http://www.omegawatches.us.com/

    pandora charms, http://www.pandora-charms.org.uk/

    pandora jewelry, http://www.pandorajewelry.com.co/

    polo outlet, http://www.polo-outlets.com/

    prada outlet, http://www.pradahandbags.net.co/

    prada handbags, http://www.pradahandbags.com.co/

    prada outlet, http://www.pradashoes.com.co/

    ralph lauren uk, http://www.ralph-lauren.org.uk/

    polo ralph lauren outlet, http://www.ralphlaurenoutlet.us.com/

    ralph lauren, http://www.ralphlauren-outlet.org.uk/

    ralph lauren shirts, http://www.ralphlaurenoutletonline.com.co/

    ralph lauren outlet, http://www.ralphlaurenoutletonline.in.net/

    polo ralph lauren, http://www.ralphlaurenpolo.in.net/

    ray ban outlet, http://www.ray-ban-outlet.us.com/

    ray bans, http://www.raybans.us.org/

    ray ban sunglasses, http://www.rayban-sunglasses.org.uk/

    ray-ban sunglasses, http://www.rayban-sunglasses.us.org/

    ray ban sunglasses outlet, http://www.raybansunglassesoutlet.net.co/

    ray ban wayfarer, http://www.raybanwayfarer.in.net/

    replica handbags, http://www.replicahandbags.com.co/

    rolex watches, http://www.replica-watches.us.com/

    retro jordans, http://www.retro-jordans.com/

    rolex watches, http://www.rolex-watches.me.uk/

    nike roshe, http://www.rosherun.org.uk/

    roshe run, http://www.rosheruns.us/

    salvatore ferragamo, http://www.salvatoreferragamo.in.net/

    soccer shoes, http://www.soccer-shoes.org/

    baseball bats, http://www.softball-bats.us/

    supra shoes, http://www.suprashoe.net/

    swarovski crystal, http://www.swarovskicrystal.com.co/

    swarovski jewelry, http://www.swarovskijewelry.com.co/

    swarovski, http://www.swarovski-uk.org.uk/

    the north face, http://www.the-northface.com.co/

    the north face jackets, http://www.the-northface.in.net/

    north face, http://www.thenorth-face.org.uk/

    north face outlet, http://www.thenorthface.us.org/

    north face outlet, http://www.thenorthfacejackets.in.net/

    thomas sabo, http://www.thomas-sabo-uk.co.uk/

    tiffany and co, http://www.tiffanyandco.net.co/

    tiffany jewelry, http://www.tiffanyjewelry.us.org/

    timberland outlet, http://www.timberlandboots-outlet.net/

    timberland boots, http://www.timberlandshoes.com.co/

    tommy hilfiger outlet, http://www.tommyhilfiger.net.co/

    tommy hilfiger kids, http://www.tommy-hilfigeroutlet.com/

    toms shoes outlet, http://www.tomshoes-outlet.com/

    toms outlet, http://www.toms--outlet.in.net/

    toms shoes, http://www.toms-shoes.com.co/

    tory burch outlet, http://www.tory-burch-outlet.in.net/

    tory burch outlet, http://www.tory-burchoutlet.us.com/

    true religion, http://www.true-religion.com.co/

    true religion jeans, http://www.truereligionjeans.net.co/

    true religion outlet, http://www.truereligion-outlet.com.co/

    ugg australia, http://www.uggaustralia.net.co/

    ugg boots, http://www.uggboots.net.co/

    ugg boots clearance, http://www.uggbootsclearance.com.co/

    uggs on sale, http://www.uggsonsale.com.co/

    uggs outlet, http://www.uggsoutlet.com.co/

    coach outlet, http://www.uptocoachoutlet.com/

    vans shoes, http://www.vansshoes.us/

    wedding dresses, http://www.weddingdressesuk.org.uk/

    yoga pants, http://www.yogapants.com.co/

    ugg boot sale, http://www.ugg-boots.us.org/

    polo ralph lauren outlet, http://www.poloralphlaurenoutlet.net.co/

    burberry outlet online, http://www.burberryoutletonline.ar.com/

    toms outlet, http://www.toms-outlet.net.co/

    michaelkors.com, http://www.michaelkors.in.net/

    christian louboutin, http://www.christianlouboutinoutlet.net.co/

    tory burch sale, http://www.toryburchsale.com.co/

    prada outlet, http://www.pradaoutlet.com.co/

    longchamp handbags, http://www.longchamp-handbags.in.net/

    longchamp outlet, http://www.longchampoutlet.com.co/

    chanel bags, http://www.chanel-bags.com.co/

    true religion outlet, http://www.truereligion-outlet.us.org/

    abercrombie and fitch kids, http://www.abercrombie-and-fitch.us.com/

    hollister clothing, http://www.hollisterclothing.in.net/

    new balance shoes, http://www.newbalance-shoes.org/

    converse shoes, http://www.converses-shoes.net/

    lululemon outlet, http://www.lululemonoutlet.com.co/

    nfl jerseys, http://www.nfl-jerseys.in.net/

    cheap jerseys, http://www.cheapjerseys.us.org/

    rolex watches, http://www.rolex-watches.us.com/

    rolex watches for sale, http://www.rolexwatchesforsale.us.com/

    p90x workout, http://www.p90xworkout.in.net/

    giuseppe zanotti, http://www.giuseppezanotti.com.co/

    mac cosmetics, http://www.maccosmetics.net.co/

    instyler ionic styler, http://www.instyler.in.net/

    mizuno wave, http://www.mizunorunning.net/

    designer handbags, http://www.handbagsoutlet.com.co/

    tommy hilfiger, http://www.hilfigeroutlet.in.net/

    ed hardy, http://www.edhardy.in.net/

    levi's jeans, http://www.levisjeans.com.co/

    bcbg max, http://www.bcbgdresses.net/

    bebe dresses, http://www.bebeclothing.net/

    harrods, http://www.harrods-london.co.uk/

    gucci outlet, http://www.guccishoes.com.co/

    ralph lauren outlet online, http://www.ralphlaurenoutletonline.us.org/