Abercrombie & Fitch on Monday announced that Arthur C. Martinez will step down as executive chairman of its board of directors at the conclusion of the fiscal year ending Feb. 3. Terry L. Burman, lead independent director and chair of the nominating and board governance committee, will assume the role of non-executive chairman at that time, according to a press release.
Martinez and Burman both joined the board in January 2014, when Martinez was also appointed non-executive chairman of the board; he has served as the executive chairman since December that year. Starting in late 2015, Martinez also led a team of executives in lieu of a CEO after the departure of longtime chief executive Mike Jeffries.
Also on Monday, the teen apparel retailer, now led by CEO Fran Horowitz, raised its outlook for the fourth quarter of fiscal 2017, saying it expects same-store sales to be up high-single digits, compared to its previous outlook of up low-single digits; net sales to be up low-teens, compared to the previous outlook of up mid- to high-single digits, and a gross profit rate in line with the previous outlook of down approximately 100 basis points from last year's 59.3%.
In November, Abercrombie & Fitch wowed investors with third quarter results that handily beat expectations. Its improved fortunes, as Moody's Investors Service analysts noted on Monday, reflect in part rosier results overall in apparel sales.
"We believe increased consumer confidence, seasonally favorable cold weather and tight inventory management are driving the strong performance," Moody's VP-Senior Analyst Raya Sokolyanska said in an email to Retail Dive. "The company's efforts to turn around its brands are also paying off, and it is particularly encouraging to see Abercrombie & Fitch's same-store sales growth turning positive for the first time in years."
But it's not just consumer confidence, which has helped lift results from even bedraggled department stores — Abercrombie itself has also worked to improve its merchandise and its store operations, and shoppers are responding. So far, sales have been strongest at its lower-priced, more casual Hollister brand, but its flagship appears to be catching up.
"On the product front, there have been significant improvements in quality, especially to fabric and stitching," GlobalData Retail Managing Director Neil Saunders told Retail Dive in an email. "Subtle detailing, like more stylish buttons on shirts, has also helped to give basic garments a lift. On top of this, the big logos of the past have been firmly ditched in favor of no-branding or very subtle A+F monograms. The net effect is a range that is more mature and sophisticated, with much more emphasis on fit and function than branding."
The retailer's new stores, still being tested in just a few locations, are "revolutionary rather than evolutionary," he also said, noting that, in contrast to the company's Jeffries-era dark, perfumed stores, these are "light and open" and "almost unrecognizable as A&Fs."
The improvements have come under the leadership of Horowitz, who was president and chief merchandising officer and part of the Martinez-led executive team that orchestrated the turnaround of the teen apparel retailer's Hollister brand. She was promoted to CEO nearly a year ago.
Martinez, who is 78, is departing the company after a long retail career. He arrived after a stint as Sears Roebuck & Co. CEO late in the 20th century, (well before the Eddie Lampert era), when he returned that retailer to profitability after years in the doldrums. Before that he held a series of senior executive jobs at Saks Fifth Avenue and elsewhere. In a statement Monday he suggested that the company is in good hands.
"We have built a first-rate team whose intense focus on the customer, the revitalization of our brands, and close management of expenses to help direct resources to omnichannel and marketing have enabled us to deliver sequential comparable sales improvement," he said.