Abercrombie & Fitch Makes Key Changes To Board Of Directors
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
The retailer has separated CEO and Chairman roles, eliminating CEO Mike Jeffries’ chair
Abercrombie & Fitch announced some “significant changes” to its board of directors this week in order to appease concerned shareholders. While Mike Jeffries will remain the company’s CEO, the board stripped him of his title as chairman and will be replacing him with former Sears CEO Arthur Martinez, effective immediately. There will also be two new independent directors added to the board: Terry Burman, former CEO of Signet Jewelers and Barry’s Jewelers, and Charles Perrin, former CEO of Avon Products and Duracell International. The company also announced it would be eliminating its shareholder rights plan, or “poison pill,” which analysts say could encourage a leveraged buyout in the future.
Despite the fact that Jeffries is losing his chairman position, he speaks out in support of the new appointments. “I have strongly supported the significant corporate governance enhancements the company has made in the past few years, and I am thrilled by the announcements we are making today,” Jeffries says. “Arthur Martinez brings extensive sector expertise, deep boardroom experience, and valuable perspectives to the new role of non-executive chairman. I am confident that he is the right choice to lead the board of Abercrombie & Fitch as we execute our strategic plans and move in to the next phase of the company’s growth.”
Jeffries has held the chairman position since 1998 and has been the company’s CEO since 1992 when he helped to turn the brand from a sports brand to one that would “sizzle with sex,” Reuters reports. However, it’s been a competitive time for teen retailers, and especially for the more expensive ones like A&F. “Fast fashion” chains, such as Forever 21, have been particularly successful in swiping teen shoppers’ valuable — not to mention dwindling — spending money. This has led many to question Jeffries’ strategies, which thus far, have failed to boost sales.
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Separating the CEO and chairman positions could be a good move for the company, considering shareholders have been expressing concerns about Mike Jeffries’ influence on the company. By bringing new members onto the board, the company will get some fresh influences on its turnaround efforts and the company’s attempts to enhance its image following recent incidents of bad press still haunting the brand.
Despite the fact that investors have expressed disapproval of Jeffries’ leadership, A&F announced in early December that it would be keeping Jeffries on board as CEO once his contract expires on February 1st. However, according to his new contract, his salary will be more dependent upon how the company performs. In his prime, Jeffries was responsible for taking the company from just 36 domestic stores bringing in $50 million in sales to a global company raking in over $4 billion in sales today. Coming out of the holiday, the company reported direct-to-consumer sales losses and U.S. comparable store sales losses of 6 percent and 4 percent respectively.
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