Abercrombie & Fitch Shareholder Calls for New CEO
NEW YORK — An investment firm said Tuesday that Abercrombie & Fitch should not renew its contract with CEO Michael Jeffries when it expires in February. Shares of the teen retailer rose more than 5 percent in afternoon trading.
Engaged Capital, which says it owns about 400,000 shares of the teen retailer’s stock, said the move would “set a new direction for the company.”
Jeffries joined Abercrombie & Fitch in the 1980s and gave it the preppy teen image it is known for. But he has come under fire recently for comments he made in 2006 relating to the type of customer he wants in his store and the fact that the store does not offer plus sizes. Earlier this year the comments were picked up by a website and went viral. The company has since begun anti-bullying initiatives.
Meanwhile the company is facing sliding sales. It reported a loss in its third quarter as it closed its Gilly Hicks stores, and revenue fell 12 percent to $1.03 billion.
“Investors in Abercrombie have endured poor performance due to poor leadership for far too long,” Glenn Welling, principal and chief investment officer of Engaged Capital, said in a statement. The company is calling for a new CEO search or for the company to consider a sale.
Abercrombie responded in a statement that its board and management team are “committed to creating value, and we welcome input from all shareholders.”
New Albany, Ohio-based Abercrombie added that it “has had extensive discussions with many of its shareholders, including Engaged Capital, over the past several months” and plans on “continuing our dialogue with shareholders.”
Abercrombie shares rose $1.87, or 5.5 percent, to $35.89 in afternoon trading. The stock had been down 29 percent since the beginning of the year.
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