|Why Is Mike Jeffries Still the CEO of Abercrombie & Fitch?|
By Josh Wolonick DEC 13, 2013 12:42 PM
The teenage-marketed clothing retail company has renewed its contract with the controversial executive, causing its stock price to drop.
The board seems to have found themselves in a position where they might not have wanted to retain Jeffries, but they also didn't have any long-term solutions. In a lot of companies, they might have gone with a short-term placeholder CEO, but my feeling from having worked in situations where a company is faltering and leadership needs to be changed is that Abercrombie & Fitch is having a brand identity crisis and [board members] can't quite wrap their heads around what they want to be.
The offensive and exclusionary things Jeffries has said are by no means new: He's been claiming Abercrombie is for the "cool kids" since the beginning of his tenure, and the board failed to realize that this might eventually cause a backlash to the company's brand appeal, and to its stock price, said Wakeman.
Jeffries Made the Company What It Is
At this point, Mike Jeffries' pay is dependent upon company earnings. I honestly believe that they see an opportunity where, at this point, with the declining stock price, it is apparent that they may not make those sales, and that they have him in position for very low cost. Also the company has received more press, though negative, than it has in recent years.
Tatum does acknowledge, however, that the savings the board is making on its CEO are likely not worth the negative impact on the brand. As she told us, "Renewing his contract does scream to the public that they indeed agree with his previous comments and public viewpoints of who the company cares about as customers."
Is the Company's Demographic Less Outraged Than the Media?
Dave Wakeman suggested to Minyanville that Abercrombie consumers are perhaps responding with less outrage to Jeffries' statements than the general media because they don't find his ideas or opinions offensive. "A&F did an exceptional job of marketing themselves to a certain consumer within a certain age bracket that might find Jeffries' view consistent with their own world view," he told us. Then again, Wakeman also added that Jeffries' behavior is bully-like, and that our society is now "very focused on any type of bullying or perceived bullying behavior." Teenagers may be narcissistic, but Wakeman believes that even they are more critical of bullying now than they once were. He suggests that the proliferation of social media may have something to do with this, but that's a topic for another story.
Everyone we spoke with agreed that Abercrombie cannot simply offer larger sizes and hope to improve its sales, but it must embrace a real sense of inclusion for new consumers. As Andrew Schrage told us, the company "has taken a few steps in the right direction -- it recently held meetings with leaders of an eating-disorder organization as well as a teen empowerment group, but it will need to continue to ramp up efforts in that area if it plans on being around for the long haul."
Dave Wakeman believes that a true remodeling of the company and its demographic will ultimately prove impossible for the current leadership. "They've always been a brand that portrayed a narcissistic world view that's just not in line with expanding their size offerings," he said. He feels any significant shifts in Abercrombie's business will have to happen without Jeffries and the rest of the company's current leadership.
The board of Abercrombie seems to agree with him: The heads of the company's three main brands are being replaced, and a major part of Jeffries' new contract stipulates that there must be a succession plan for a new CEO in place within the next few years.
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