Abercrombie & Fitch Might Pay for CEO Jeffries' Sins

NEW YORK ( TheStreet) -- In 2013, Mike Jeffries of Abercrombie & Fitch ( ANF) is the CEO people most love to hate.

Jeffries, who was born in 1944, is the very picture of Dorian Gray. (Read Oscar Wilde's novel free at Project Gutenberg.) From a distance he looks like he was born in 1984. Blogger Uglyboyfresh calls him a cross between Joan Rivers and Gary Busey.

Jeffries built Abercrombie & Fitch from nothing, after The Limited (now known as L Brands ( L Brands)) bought it out of bankruptcy in 1988. He saw it as a high-fashion store for the young, suburban and beautiful. It was spun out of The Limited in 1996 to trade on its own and has been paying dividends since 2004. If you'd invested $100 in the company's shares in 1996, you'd now have about $450. Before the Great Recession, this was an $80 stock, and it nearly returned to those heights again in 2011.

Mike Jeffries is a proud man, a vain man, and wants others to see him as a great man. So in 2006 he opened up to Salon, surrounded by young, attractive acolytes, and admitted "We go after the cool kids," adding that his brand is "exclusionary."

The interview waited until this year to explode over the Internet, until after Swedish rival H&M began featuring a plus-sized model, an online petition gained support of the masses and celebrities voiced their disdain.

Suddenly the beautiful people, who all want to look like A&F but don't want anyone to know they disdain their less-attractive friends, rose up in anger. Reportedly Ellen DeGeneres condemned the chain on her TV show. Miley Cyrus said she was going to burn her A&F wardrobe. Videographer Greg Karber dressed homeless people in A&F gear as a protest.

Jeffries did what you'd expect. He apologized. He had his executives deliver that apology to protesters in person, and ABC did the story for its "Good Morning America" show.

Worse, the controversy started hitting Abercrombie & Fitch's top line. Sales during the spring quarter, ending in May, were down almost 10% from the same period a year ago. The stock fell from $56 in late May to $43.50 in late June.

But if you bought the dip you're doing well. The stock is back to more than $50, the 20 cents-a-share dividend remains intact, and this month Jeffries let the same online publisher that did the original hit piece know that he also hates the color black.

He may be a Bond villain, but so far Mike Jeffries isn't hurting. Jeffries earned more than $48 million in the company's last fiscal year, mostly from stock options, and at current prices he has options worth another $156 million. The company still retains its private jet where the flight crew is outfitted in the chain's clothes. The new "back to school" catalog is out, once more featuring young hunks photographed by famed fashion photographer Bruce Weber.

Assuming the summer quarter's numbers, due out in late August, are up to standard, all Jeffries' quirks will be forgiven. The only thing Wall Street will protest is a bad result.

At the time of publication, the author owned no shares in Abercrombie & Fitch.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Dana Blankenhorn has been a business journalist since 1978, and a tech reporter since 1982. His specialty has been getting to the future ahead of the crowd, then leaving before success arrived. That meant covering the Internet in 1985, e-commerce in 1994, the Internet of Things in 2005, open source in 2005 and, since 2010, renewable energy. He has written for every medium from newspapers and magazines to Web sites, from books to blogs. He still seeks tomorrow from his Craftsman home in Atlanta.

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