Abercrombie & Fitch Co. Separates CEO And Chairman

Abercrombie & Fitch Engaged Capital

For the last two months, Abercrombie & Fitch Co. (NYSE:ANF) have been inundated with calls by activist investor Engaged Capital LLC to begin looking for a new CEO.

It appears that Engaged, who owns about 400,000 shares, or less than 1 percent of shares outstanding, may finally be getting its wish.

Engaged gets its wish for Abercrombie?

Today, Abercrombie & Fitch Co. (NYSE:ANF) separated its chairman and chief executive officer roles. Arthur Martinez, formerly of Sears, will slip into the role of non-executive chairman. Michael Jeffries, who had been chairman since 1996, will continue to serve on the board and as CEO according to the teen-retailer.

Simeon Siegel, a New York-based analyst at Nomura Securities who has a Buy rating on Abercrombie stock, spoke of the move by phone with Lindsey Rupp of Bloomberg News.

“This is just a continuation of their response to the Engaged letter, and this is their way of ‘ousting’ him in deference to Jeffries and what he’s done historically for the company,” he said. “This seems like a political way of saying let’s gradually take away power. It’s further support for the notion that Abercrombie & Fitch Co. (NYSE:ANF) is becoming more shareholder friendly.”

Over the last year, Abercrombie & Fitch Co. (NYSE:ANF)’s sales have been dismal as the company strives to reconnect with the customer base it has lost. Abercrombie & Fitch has seen sales declines in three consecutive reported quarters.

Following the announcement shares rose over six percent in morning trading. As of this writing the stock was trading at $36.43, up $1.79 or 5.42%.

The announcement today also shows a continuing trend of separating the CEO and chairman jobs. In 2008, only 39% of the Standard & Poor’s 500 Index boards were separated. Presently, 45% of the same boards have the two positions separated.

New contracts and board seats

With the announcement today also came news of a new contract for Jeffries. He will be given a base salary of $1.5 million as well incentives that could reach $6 million and annual bonuses of as much as $4.5 million. This contract will go into effect on February 1st when his old deal expires.

In addition to the separation, Abercrombie & Fitch Co. (NYSE:ANF) announced two new board members with retail experience. Terry Burman, former CEO of Signet Jewelers Ltd., and Charles Perrin, a former CEO of Avon Products Inc., are set to join the board effective immediately.

About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com