Why Abercrombie's Sudden Loss of a Key Executive Is Surprising

With Abercrombie & Fitch (ANF) - Get Report mounting a long-awaited sales turnaround, losing an exec who has played a key role in regaining momentum may come as surprise to investors. 

Shares of the specialty apparel retailer fell 4.7% Thursday as the company announced Chief Operating Officer Jonathan Ramsden, who was seen by Wall Street as the successor to Executive Chairman Arthur Martinez, intends to step down effective June 15. Ramsden's responsibilities will be handed off to Martinez and several other senior level executives.

According to a source close to the matter, Ramsden's decision to leave was a personal one, and that he has indicated for some time an intent to move on at an appropriate point.

The announcement may mean that Martinez, who took over for long-time Abercrombie & Fitch CEO Mike Jeffries in December 2014, will stay on as leader of the company longer than expected. 

"The board and I are grateful for Jonathan`s contributions to Abercrombie & Fitch over the past seven years, which have helped position the company for future profitable growth -- we wish him all the best as he prepares to move into a new chapter in his life and career," said Martinez in a statement.

Ramsden added, "I have a strong attachment to Abercrombie & Fitch and to the fantastic group of people I work with every day -- the decision to leave was a very difficult one, but I know that the company is in the hands of an outstanding leadership team and that we have built a strong foundation for growth and success."

Ramsden, hired by Jeffries back in 2008, has worked diligently to overhaul how quickly the company brings products to market and the looks of the stores. He has also been the driving force behind shuttering hundreds of unproductive Abercrombie & Fitch and Hollister locations post Great Recession, and debuting a new ship from store program to satisfy online orders.

Ultimately, Ramsden leaves Abercrombie & Fitch in a better state than when he arrived.

The company's comparable-store sales, or sales from stores open longer than a year, rose 1% during the fourth quarter. The increase represented the first gain in overall comparable store sales since the third quarter ended October 29, 2011, according to Bloomberg data.

The Abercrombie & Fitch division, which has undergone a major shift to more polished clothing that targets 25- to 34-year-old men and women, managed to improve its comparable-store sales results each quarter of 2015. For the fourth quarter, same-store sales for the Abercrombie division declined 2%, better than the 5% drop in the third quarter. 

At Hollister, which has sharpened its price points to compete with fast fashion players such as H&M and enhanced its California lifestyle offerings, it posted its second straight same-store sales increase. At a 4% increase for the quarter, the comparable store sales result bested the 3% increase from the third quarter.