The company was initiating a search for Jeffries' replacement and in the meantime the company formed an Office of the Chairman, consisting of Chairman Arthur Martinez, COO Jonathan Ramsden and the brand presidents for both Abercrombie and the second brand it owns, Hollister.
Mall-based teen retailers, including Abercrombie, American Eagle (AEO) , Aeropostale (ARO) , Express (EXPR) and others have suffered from slowing sales as consumers shop increasingly online and for gadgets and sneakers as opposed to clothes.vAbercrombie has specifically been the target of criticism given its provocative advertising and controversial Jeffries, who started the company in the early 1990s. Jeffries has publicly said that the preppy retailer is exclusionary to customers.
Abercrombie shares are down 15% for the year, but investors were cheering Jefferies' departure, sending shares higher by 6.6% to $28.10 at last check. Here's what analysts had to say about the departure:
Eric Beder; Wunderlich Securities (Hold; $30 PT)
Timing shocking...nothing else is. It has become obvious to us that given the highly disappointing performance of the company in FY15 and the recent hiring of the two brand presidents, the company was setting up a succession plan for when Mr. Jeffries' latest employment contract would expire (in February 2015). That said, for Mr. Jeffries to retire during the holiday period is surprising, and speaks, we believe, to continued weakness at the company and the overall teen space.
We see no reason, with no CEO in sight and the segment on its knees, to be aggressive in any teen retailer, let alone ANF. As the high price "leader," the company has to be the one to register some level of pricing integrity before the rest of the group can register better returns; we do not see this occurring in the near term, and the CEO search will further cloud matters. As such, we remain even more firmly on the sidelines with ANF.