Abercrombie CEO Mike Jeffries Just Defied All His Haters
Abercrombie was quickly declining in value and seen as a takeover target. Jeffries is a notorious micromanager, even controlling what shoes models on the private jet can wear, and it was hard to imagine such a controlling CEO being flexible enough to make it in today's challenging market.
But today, Abercrombie reported results, and their sales, inventory and profits are better than anyone imagined. Shares are up nearly 30 percent on the news, a sign that investors are once again confident in Jeffries' leadership.
Last month, the CEO made headlines when it emerged that he made models on the private jet wear a spritz of Abercrombie cologne and make seating arrangements for his three dogs.
Many analysts say that the retailer has struggled because it hasn't adapted to the fast-fashion mentality of its young customers. While teen culture has changed immensely in 15 years, Abercrombie has not.
Recent quarters were so bad that analysts began speculating that Abercrombie might be a takeover target. If a private-equity firm were to acquire Abercrombie, it seemed unlikely that such a controlling CEO would be able to adapt to appease the new guys in charge.
But Jeffries responded to the downturn by managing expenses at Abercrombie, closing underperforming stores and cancelling construction of new ones.
Abercrombie's inventories are also down, meaning that teens are buying their clothes.
It looks like Jeffries finally has some vindication. Now that expenses are under control, the CEO can focus on innovating the brand.
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