NEARING HALFWAY through the second quarter and the greater FY2014, progress for the betterment of Abercrombie & Fitch Co. has been resolutely taking hold in awe. Apart from the fresh flourishment of creativity and diversification of product offerings still on going, store redesigns, and overall forward retail infrastructural change-ups, corporate governance has been irrefutably on the frontline of this paramount new period for the Company.
On June 20th, the Institutional Shareholders Services announced A&F as having pulled a "complete 180" in the past year as reflected on the ISS' QuickScore rating system.
"ISS Governance QuickScore 2.0 is a scoring and screening solution designed to help institutional investors identify governance risk within portfolio companies. QuickScore 2.0 provides investors with the tools and insight they need to assess governance attributes categorized under four pillars: Board Structure, Shareholder Rights, Compensation/Remuneration, and Audit. As these governance factors play a heightened role in investment decision-making, investors are increasingly using data and analytics to support their analysis. The need for data-driven tools to complement qualitative research has emerged as an important trend." – ISS, QuickScore, About
Upon the 2013 introduction of the QuickScore system (see methodology and more) A&F scored an alarming 10 (the lowest rank) which only preceded the brazen criticism of its governance structure and performance in light of quantitative proof of progress stagnation and deteriorating business health. Today, after the rollout of multitudinous new initiatives still taking effect, the Company stands with a golden 1 high mark.
"I can't recall another company that had that dramatic improvement, literally from the highest risk to the lowest risk. It’s a pretty unique turnaround. It’s a great outcome," commented Chris Caras, ISS vice president. "They separated their chairman and CEO roles," Caras said. "[Those two roles together] is a clear red flag for any company."
Other aspects noted to have had a significant role in the ranking jump: changing up the A&F Board of Directors by expanding and introducing independent directors; revising executive compensation plans (Mike's namely) to a more pragmatic form; and getting rid of the Company's "poison pill" (read report here). This considerably sharpened corporate checks-and-balances at A&F, and it improved shareholder rights/audits.
Nevertheless, the one thing singled out for still need of fine tuning is pay based on performance. "Sometimes that takes time to smooth out," added ISS' vice president.
The news comes at a time when stock for ANF on the NYSE has now risen this month to the highest its ever been – up at 42.77 by the time of the publication of this post (refer to the bottom of #THEHOTTESTBLOG on desktop for interactive ANF stock chart) – since the steep August 2013 decline; it's around six points short of being on par and surpassing levels before the fall. Stock has been steadily climbing since the start of FY2014 ("game-changer year" as most would well agree to call it).
Furthermore, these recent milestones this month settle in after the May 29th release of Q1 results and the June 10th announcement of Christos Angelides – beginning work October 2014 – as president of the Abercrombie & Fitch and abercrombie kids divisions.
"We are excited to welcome Christos to the Abercrombie & Fitch team and to deepen our bench of senior leadership talent. Christos [(who's spent his entire career with Next plc, a highly successful six billion dollar fashion retail and internet chain based in the United Kingdom)] brings 28 years of experience working with a multi-billion dollar international retailer. His experience with all aspects of running a business made him the perfect candidate for this newly created role. Christos' appointment is a critical step in our long-term strategy of being organized to win and we are excited to welcome him to the Abercrombie team." – Michael "Mike" S. Jeffries, CEO
"I am honored to join one of the most iconic apparel brands in the world. Abercrombie & Fitch is a storied brand with global appeal and a clearly defined aesthetic, and I am excited to help the brand continue to grow. I look forward to working with Mike Jeffries and the rest of the A&F team at what is a very exciting time for the Company." – Angelides
Settle that Moose-branded baseball cap real nice and fit, kiddos. The game's only just getting better...