Jan 28, 2014
Michael Jeffries no longer Chairman at Abercrombie & Fitch
Jan 28, 2014
Teen apparel retailer Abercrombie & Fitch Co stripped Chief Executive Mike Jeffries of his chairman duties and abandoned a plan aimed at blocking hostile buyout bids.
Abercrombie shares rose nearly 7 percent on Tuesday.
The moves come little over a month after the company extended Jeffries' contract by at least a year, ignoring shareholder Engaged Capital LLC's call to replace the CEO.
Jeffries, whose contract was due to expire in February before the extension, has been criticized for presiding over seven straight quarters of declines in same-store sales as the company ceded market share to "fast fashion" chains such as Inditex's Zara.
Analysts have raised concerns about the Abercrombie's ability to boost sales, saying management was more focused on marketing and cutting costs than on improving merchandise in a bid to bring teen shoppers back into its stores.
The company said on Tuesday that Jeffries, who has served as chairman since 1996, will continue to serve as its CEO. Arthur Martinez was appointed non-executive chairman and added to the company's board.
Abercrombie also appointed two independent directors, Terry Burman and Charles Perrin, increasing the number of board members by three to 12.
The company also said it would drop a plan that triggers the issue of new shares, designed to dilute the holding of any shareholder that raises their stake above a certain threshold.
The shareholder rights plan, commonly known as a "poison pill", was adopted in 1998 and was set to mature in 2018.
Engaged Capital, which owns less than 1 percent of Abercrombie's stock, had also said that the company should sell itself if it did not replace Jeffries.
Rival American Eagle Outfitters Inc, which is also struggling with fickle teen shoppers, said last week that Chief Executive Robert Hanson would leave the company.
Abercrombie shares were trading up 6 percent at $36.82 in morning trading on the New York Stock Exchange on Tuesday.
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