Mike Jeffries, the CEO of Abercrombie & Fitch and the creator of industry competitor Hollister, is leaving the struggling company effective immediately, Abercrombie announced this morning.
Jeffries is considered one of the most influential retail executives in the world who was known for his tight control of his company, the store environment and product.
He is responsible for creating a $2 billion surf-inspired retail chain under the nose of the surf industry, even though Hollister has no surf roots and is based in Ohio.
One of the most genius moves in the creation of Hollister was to showcase the surf lifestyle by having large video screens showing video feeds of the beaches surrounding the Huntington Beach Pier.
It was a key component of Hollister’s success and brand aesthetic, made even more galling to the surf industry because the images were coming from the industry’s backyard in Orange County.
Shop-eat-surf looked into the arrangement Hollister had with the city of Huntington Beach in 2011 and discovered the company paid only $116,000 a year plus CPI increases for the video feeds, according to a 2008 contract.
While Jeffries was considered a brilliant retailer for decades, he failed to come up with the magic answer to the current retail landscape. The changing teen customer, the faster moving fashion trends due to the always connected world, the reduction in mall traffic, the downturn in sales of basic apparel product, the rise of strong and cheap fast fashion players, have all taken their toll on the Abercrombie and Hollister businesses.
Hollister was one of the weakest performers at the mall in Q3, with same store sales down 12%, even though the retailer offered 40% to 50% off much of the store during the quarter.
The company is in the midst of trying to transform itself, but the changes have not come fast enough.
By comparison, PacSun under Gary Schoenfeld has greatly evolved and he has made many right moves since he became CEO in 2009. He has added much more fashion to the mix, raised the age of the target customer to late high school/college- age, increased speed to market, added exclusive or harder to find brands to the assortment, and improved customer service.
Those changes are working. In Q3, PacSun’s same store sales rose 4%, a huge win in the current environment. Walking into a store, you can see how much the clientele has changed, with the average shopper older and often much hipper than the preteen customer of old.
Abercrombie and Hollister are in need of a radical transformation, or they risk getting left behind forever in this fast evolving retail world. The company will search for a new CEO as the Jeffries era comes to an end.
Given the changing dynamics at the mall and the winners and losers that are emerging, there will likely be more executive casualties in the future.
In a statement Jeffries said, “It has been an honor to lead this extraordinarily talented group of people. I am extremely proud of your accomplishments. I believe now is the right time for new leadership to take the company forward in the next phase of its development.”
Abercrombie’s stock is up 7% this morning on news of the Jeffries exit.
Â
