NEW YORK (AP) – Abercrombie & Fitch’s longtime and embattled CEO Michael Jeffries has abruptly retired as the once-hip teen clothing chain struggles to regain its popularity.
Investors applauded the move, pushing Abercrombie’s shares up eight per cent.
Jeffries, who has served as CEO since February 1992, is also retiring from the retailer’s board of directors.
He reinvented the chain from an ailing retailer of hunting apparel to a seller of teen clothing that became a must-have brand for young consumers. But since the recession, it has lost its appeal amid stiffer competition and changing tastes.
Last week, Abercrombie & Fitch cut its annual profit outlook and reported an 11.5 per cent drop in sales in its third quarter.
“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.
The company, whose other brands includes Abercrombie, Hollister Co and Gilly Hicks, said it has begun a search for Jeffries’s successor and has hired a search firm to evaluate both internal and external candidates.
Jeffries’ departure was expected, but BMO Capital Markets analyst John Morris noted that the timing was “noteworthy” given his employment contract didn’t expire until February.
Jeffries leaves under a cloud of controversy. Last year, activist hedge fund Engaged Capital sent a letter to the company’s board pushing for Jeffries to be replaced. Engaged said at the time it believed the retailer’s “perennial” underperformance was a result of a failure of leadership.
The outspoken Jeffries also stirred up controversy for statements about how Abercrombie & Fitch goes after attractive kids who can fit into its clothes, alienating customers who don’t mirror the brand’s image.