Abercrombie & Fitch finally names a CEO
Abercrombie & Fitch Co. announced that Fran Horowitz, who as president and chief merchandising officer led the turnaround of the teen apparel retailer’s Hollister brand, has been promoted to CEO, effective immediately. She will also join the board of directors.
Abercrombie & Fitch also promoted Joanne Crevoiserat, executive vice president and chief financial officer, to chief operating officer. Crevoiserat also will continue in her current roles, and Arthur Martinez will remain on as executive chairman.
In late 2015, Abercrombie & Fitch ended its search for a chief executive to replace longtime CEO Mike Jeffries, opting instead to hand control of its day-to-day operations to a Martinez-led group of executives including Horowitz.
Abercrombie & Fitch has been the latest teen apparel retailer to stumble: Aeropostale was recently saved by a consortium of investors that includes its own landlords, while Wet Seal, The Limited and American Apparel, which all recently declared bankruptcy and shuttered stores, are likely to live on only as licensed brands made by other companies (if at all).
Abercrombie last week announced job cuts at its headquarters after reporting its 15th straight decline in quarterly sales in November and weathering a tough holiday season. A new marketing campaign has failed to catch the attention of its former fans. Abercrombie has emphasized expense reductions of late; in addition to its HQ cuts, the company is weighing store closures as leases come up for renewal. That has helped its bottom line, according to Moody’s Investors Service.
“Abercrombie continues to face significant challenges in repositioning its namesake brand in a more challenging apparel retail environment,” Moody’s analyst Mike Zuccaro said in November. “However, it continues to maintain a conservative financial policy, with moderate debt and leverage levels and very good liquidity. Balance sheet cash continues to amply exceed funded debt levels. We expect this to remain the case as the company further implements its turnaround strategy.”
And its Hollister brand has been a bright spot: Abercrombie's Q3 net sales fell 13% to $358.3 million, but just 1% to $463.5 million at Hollister, compared to the year-ago period. Part of Hollister’s success is that it enjoys an actual brand, says Jane Hali, CEO of investment research firm Jane Hali & Associates, while Abercrombie has failed to replace the exclusive, in-crowd vibe perpetuated under Jeffries but eventually shunned by teenagers.
“All retailers have to be known for a specialty — age is not enough. Look at Chico’s,” Hali said in an email to Retail Dive. “What is Wet Seal known for? Nothing in particular. What is Abercrombie known for? Hollister is known for a California vibe of shorts, ‘boho,’ etc. American Eagle Outfitters is known for their stretch denim and [lingerie line] Aerie. TJX and Ross have mentioned the increase in their teen selling, especially at back-to-school time, and I believe it — they like the prices and limited assortment. They believe in the value. The off-pricers have taken share in the teen space.”
In its statement trumpeting Horowitz's promotion, Abercrombie highlighted her work at Hollister, indicating it may be hoping she can bring her turnaround touch to the flagship brand as well.
"Fran's appointment to CEO reflects the leadership she has shown in the turnaround of Hollister, our efforts to provide a compelling, customer-focused shopping experience at both of our brands and, while we have more work to do, the repositioning of the Abercrombie & Fitch brand," Martinez said in a statement. "She is a talented, creative and dedicated executive who has energized our team around important cultural values, a customer-centric mindset and a commitment to assuring our company's success. Fran's efforts have earned her the respect of the Board and associates throughout our global operations. We are confident that as CEO, she is the right person to lead the company forward.”
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