Longtime Abercrombie & Fitch CEO abruptly departs
Michael Jeffries, longtime CEO of Abercrombie & Fitch, is retiring immediately during perhaps the most important time of year for the struggling teen clothing retailer.
Abercrombie ANF jumped 8% to $28.46 on the news, but shares are off more than 37% from 52-week highs.
Jeffries, 70, will also leave the retailer's board of directors. He has served as CEO since February 1992 and was Chairman from 1998 to January.
"I believe now is the right time for new leadership to take the company forward in the next phase of its development," Jeffries said in a statement.
As recently as May, Abercrombie – which credited Jeffries as the "founder" of the modern day Abercrombie brand – described him as "critical to the company's long-term success and...critical to international expansion. " The company's annual proxy statement also said Jeffries "has more knowledge of the company's operations than any other individual."
But Tuesday's departure comes a week after the company announced a disappointing third quarter that saw sales at stores open at least a year fall 10% and revenue falling to $911.5 million from $1.03 billion in the year-ago quarter.
In a release last week, Jeffries said that while sales improved through Black Friday weekend, he expected "conditions to remain difficult through the balance of the fourth quarter."
Abercrombie & Fitch, which also owns teen retailer Hollister, has struggled to maintain its status as a destination for teen shoppers in recent years. It's been looking to stock trendier clothing as its sales have weakened and teens have chosen to shop elsewhere. The company has even worked on stripping its once-prized Abercrombie logo off products as teens seek more individuality in their clothing.
For the fall season, the company reduced its branded merchandise by half and previously announced plans to have a minimal North American logo business in the spring. Abercrombie & Fitch has also increased its emphasis on online shopping as it looks to reshape itself.
The chain said that current Non-Executive Chairman Arthur Martinez will become executive chairman. He has served as non-executive chairman since January. The company also established an Office of the Chairman that will oversee the business until a new CEO is named. The Office of the Chairman will include Martinez, Chief Operating Officer Jonathan Ramsden, Christos Angelides, Brand President of Abercrombie & Fitch and Fran Horowitz, Brand President of Hollister.
The retailer — whose brands include Hollister, Gilly Hicks and its namesake — has begun a search for a new CEO.
Abercrombie & Fitch had 834 stores in the U.S. and 166 stores across Canada, Europe, Asia, Australia and the Middle East at the third quarter's end.
As of the company's May proxy filing, Jeffries was Abercrombie's biggest individual shareholder, with a 2.36% stake. He is due a retirement payout worth over $27.6 million, according to Abercrombie's 2014 proxy.
Contributing: Gary Strauss; Associated Press