Scotts Miracle-Gro Co (SMG), Abercrombie & Fitch Co. (ANF): Loose Lips Sinks Stocks

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We don’t know exactly what was said, but it was salty enough that three directors of Scotts Miracle-Gro Co (NYSE:SMG) resigned as a result, and as The Wall Street Journal reports, the company put out a mea culpa via an SEC filing that included an apology from CEO Jim Hagedorn. Shares of the lawn care specialist are down 5% over the past week.

Scotts Miracle-Gro Co (NYSE:SMG)Coming as it does on the heels of the brouhaha created by comments made by Abercrombie & Fitch Co. (NYSE:ANF)‘s CEO seven years ago, essentially saying chubby kids and dweebs need not shop at his stores — and causing his company’s stock to drop 8% since — shows that having a personal filter is something boards of directors may want to explore when they perform executive searches in the future.

Yet there is a difference between using colorful language, which seems to be Hagedorn’s sin, and being completely tone-deaf like Abercrombie & Fitch Co. (NYSE:ANF)’s Mike Jeffries. The first is simply how one talks; the other how one thinks.

Foot-in-mouth disease
While Jeffries’ comments were resurrected because of social media and thus given new life, some executive commentary takes on a life of its own. During the Macondo rig oil spill in the Gulf of Mexico, BP plc (ADR) (NYSE:BP)‘s Tony Hayward became the poster child of tin-ear responsiveness, first by going off yachting during the height of the crisis, and then proclaiming he’d like to “get his life back” from having to deal with it, all while the livelihoods of Gulf fishermen were being ruined because of his company’s malfeasance.

Perhaps it’s because my own language is peppered with f-bombs that I’m more forgiving of those who are just rough around the edges. While it’s true that we ought to keep some check on our tongues, it’s equally the case that we’ve become hypersensitive to anything that gives the mere appearance of an affront. We really need thicker skin and to avoid manufacturing controversies, as it’s given rise to a cottage industry in corporate apologies.

The art of the apology
With customers mostly being a forgiving people, a show of remorse is often all that’s necessary for a company to move on from the incident. When JetBlue Airways Corporation (NASDAQ:JBLU) left passengers stranded on the tarmac for seven hours during a snowstorm, its COO went on YouTube and acknowledged that they dropped the ball and let down their customers. Toyota Motor Corporation (ADR) (NYSE:TM)’s recall of 3.8 million cars in 2009 led CEO Akio Toyoda to publicly apologize for his company’s failures. These were seen as sincere and believable apologies, and the companies recovered.

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