THURSDAY 18 DEC 2014 10:33 AM


What was once the most-asked for item on the teens’ and tweens’ Christmas list, has now lost most of its lustre – and its credibility, CEO and share price. Abercrombie & Fitch, purveyors of trendy, £40 graphic tees and the like, hit a five-year high on the NYSE in July 2011 when its share price reached $77.14. Today, after long-time CEO Mike Jeffries announced his retirement last week, it’s at $27.52.

“Abercrombie is [a] classic example of a short-term win coming at the expense of a long-term loss,” says communications consultancy Hanover’s associate director Enda Joyce. “Mr Jeffries’ comments about the type of people he didn’t want in his stores may have gained large amounts of media attention; they drew in customers at first by clearly positioning the brand in a crowded market. In the long-term, the positioning was a drag on Abercrombie’s reputation as deliberately alienating a large number [of] customers meant they had no one to come to the rescue when existing customers deserted the brand.”

Jeffries is best known for both turning the business from a sleepy sporting goods dealer into a teen fashion juggernaut in the mid-2000s. Yet he is also known for his inflammatory comments about the types of people he wanted wearing Abercrombie’s clothes and his intolerant policies toward hiring practices. A 2006 interview cited him saying, “In every school, there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don't belong, and they can't belong.”

The brand has since fallen out of favour by consumers seeking a different vogue. In August it announced a shift away from its strategy of placing the A&F logo on most of its clothes – a signal of the weakness of the brand.

Jeffries’ departure seems a boon for the company, yet his immediate successor is company number two Arthur Martinez. Should the company wish to stem its rapidly declining brand reputation abroad and at home in the US, it will need to make bigger changes. “The immediate share price reaction showed that the market believes the brand can recover,” Joyce says. “The new CEO has the opportunity to reposition the brand so it is still seen as aspirational but is no longer so dismissive of many potential customers. In these constrained times, it needs to reconnect with young people who have deserted it for cheaper and more fashionable competitors.”

Change is not out of the question for A&F. It is a company that has reinvented itself to meet popular demand since 1892 when it was a safari and adventure outfitter popular with the likes of Ernest Hemingway and Theodore Roosevelt. That kind of brand equity doesn’t disappear with a poor comms performance from a CEO, but the company will struggle to regain the trust of its audiences – consumer, investor and internal alike.

“In a tough period, audiences want to know what is happening, how problems will be resolved and who is responsible. The CEO is usually the lead communicator and if they are unable to win over doubters, they will usually pay the price,” Joyce adds. Though some of the company’s problems stem from Jeffries’ communications gaffes, the media tends to conflate CEOs’ personalities with that of the company itself, says Joyce.

Jeffries himself effected a transformation on the brand during his stead, turning it into a global powerhouse. Yet, by treating staff poorly – the company drew fire for sacking an employee wearing a hijab – and losing the trust of its consumers, new leaders face an uphill battle in terms of reputation. “Any CEO who seeks to revive a brand needs to be aware of how the market has changed and clearly understand where they want to position their organisation. They then need to ensure their communication in all markets is consistent with this positioning.”

This year, Abercrombie has already made positive changes to its brand image including reevaluating its fashions and the experience of its Hollister brand stores, dropping the half-naked-model approach to marketing, upping its social game and launching an anti-bullying campaign. All positive steps, but are they enough to save the brand’s reputation? Joyce says it comes down to leadership, “The CEO is usually the lead communicator and if they are unable to win over doubters they will usually pay the price. Under these circumstances, changing the CEO can have a positive impact on the long-term viability of an organisation if their replacement is perceived to be better equipped to resolve the problems.”

For now, at least, Abercrombie is trying to repair the damage.