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Why Abercrombie & Fitch Co. (ANF) Is Up 7% When The Market Is Sliding?

Abercrombie & Fitch Co. (NYSE:ANF)’s divergence from the market trend today is not the only thing that sets the company apart. The reasoning behind today’s spike in stock price is another reason which is rather anomalous. The clothing brand’s founder and CEO, Michael Jeffries, is stepping down and the decision is effective immediately. This development was discussed on Bloomberg by Julie Hyman, who listed other reasons as well on why the fate of the company is expected to change.

Abercrombie & Fitch Co. (NYSE:ANF)

“[…] Abercrombie & Fitch Co. (NYSE:ANF) has made changes to its management structure, for example, there is a new Chief Operating Officer, there are four independent directors that have been appointed to the board that were put forward by Engaged Capital. There are also new brand Presidents that are leading the Abercrombie brand, the Hollister brand […],” said Hyman.

Abercrombie & Fitch Co. (NYSE:ANF) has been in a free fall of sorts since August this year and the stock has fallen more than 36%. The issues plaguing the company include teenage brands like H&M which have a much faster changing line of clothes, which are much cheaper than that of Abercrombie. Moreover, the people who were brand loyalists have gone over to another age bracket, and the resulting gap hasn’t been filled. Investors believe that the new management will address some of those concerns, in a much more effective way than Jeffries did.

Hyman also brought into focus a remark that Abercrombie & Fitch Co. (NYSE:ANF)’s ex CEO made in an interview in 2006 which did not bear well with customers. He said something to the extent that he only wants good looking people to shop in his stores, meaning the skinny ones, according to Hyman.

“[…] Those kinds of comments, if you are a CEO who is riding on top and your brand is very successful, you can stand that much better than if your brand is on weaker positioning as is more recently so yes, he has been eccentric. There have been reports that his partner for example has, that is his personal partner, has a lot of influence at the company, that he has staffed the company with the people he is close with, so it will be interesting now to see what the next shoe to drop will be […],” remarked Hyman.

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