Abercrombie & Fitch's next CEO faces challenge to rebuild fashion brand
Teen clothing chain needs to find a new leader to rebuild brand in the face of online competition
Abercrombie & Fitch, a former purveyor of safari gear that was reborn as a teen clothing chain, is searching for its next incarnation.
The company, which announced the departure of long-time chief executive Mike Jeffries this week, needs a successor who can appeal to today's teens in an industry suffering from e-commerce competition and shrinking foot traffic. And it will have to emerge from the shadow of a man who has steered the brand for more than two decades.
"He actually was the brand," said Terre Simpson, president of executive search firm Simpson Associates. "Now it's almost as if they need retail psychotherapy to determine what the brand direction should be."
Jeffries stepped down as chief executive after the strategies that led to Abercrombie's success in the 1990s failed to resonate with current shoppers. The chain's shirtless models, booming music and conspicuous logos have lost their appeal, replaced by a desire for fast fashion and a lower-key selling style.
The new chief should be someone who understood operations and how to rebuild a brand, said Jena Abernathy, a senior partner at executive search firm Witt/Kieffer. The person would ideally come from an innovative retailer such as Hennes & Mauritz, she said.
Abercrombie said it was also considering internal candidates for the job. The top executive in line is Jonathan Ramsden, who joined the company in 2008 and was promoted to the newly created chief operating officer role in May. Another candidate is Christos Angelides, who became president of the Abercrombie brand in November after a career at Britain-based clothing chain Next.
Like many teen-apparel retailers, Abercrombie began struggling over the past decade, hurt by online rivals and the rise of cheaper alternatives such as H&M. Teens also turned away from clothes with logos emblazoned across the chest and searched for unique styles. As customers defected, Abercrombie suffered 11 quarters of same-store sales declines and a 77 per cent plunge in profit last year.
Jeffries will retire immediately from his chief executive and director roles. While the board has hired a search firm to identify successors, Abercrombie already has a plan under way for its transformation. Looser-fitting styles and the colour black are lining shelves - a break from tradition. And the company has enlisted teams to help market the brand on social media sites.
Even with a comeback plan in the works, an outsider could help bring new thinking to the company, said Pam Quintiliano, an analyst at SunTrust Banks.
The company's next chief executive would need to help the company adapt to the rapidly changing industry, Abercrombie chairman Arthur Martinez said.
"We're never going to reinvent Mike Jeffries, and we shouldn't be trying," he said. "The next step forward requires someone with somewhat different skills than Mike, and someone who's acutely aware of the disruption that's coming in the industry - the emerging dominance of online and omnichannel retailing - someone who can navigate those waters."
Abercrombie has rebounded before. The firm was founded in 1892 as a seller of outdoor gear to adventure seekers such as Theodore Roosevelt and Ernest Hemingway. Before Jeffries shifted the brand's focus to young adults in the 1990s, it was languishing. Abercrombie was reborn as a trendy chain known for its jeans, polos and T-shirts emblazoned with a moose logo. The company expanded with the Southern California-style Hollister apparel stores and Gilly Hicks lingerie shops.
Jeffries' departure comes exactly a year after he signed his last one-year contract with the company that extended his employment agreement to February 1, 2015.
"The timing is a byproduct of a long process over several months," Martinez said. "Succession planning in the boardroom today is topic No1. Selection of a [chief executive] is the most important duty a board has."
Still, the fact that Jeffries retired without a replacement lined up suggests the company is not sure of its next move. That was troubling, said Walter Jackson, director of advisory services at Marcum, an accounting and consulting firm.
"Why was there no plan? It seems irresponsible," he said. "I don't know who they would get to take this job. It seems like a huge cultural, strategic and organisational challenge."