News Now! | Abercrombie & Fitch ISS QuickScore + Stock, New Director...

         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

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News Now! | Hollister as Fast-Fashion Retailer...

The all-new storefront at HCo. Triangle Town Mall in Raleigh, NC,
which debuted in February 2014 in part of initial test. 

         IN THE WAKE of readjustments in the present for the future of Abercrombie & Fitch Co., the one individual in the A&F Family rocking the boat the most so far has been SoCal babe, Hollister Co. In need to shift itself in order to protect its preeminent place in the teen fashion retail scene, the Southern California dreamer has been rolling out significant progressive retailing strategies signifying the arrival of an unprecedented phase of evolution for the brand. While the all-new HCo. storefront has begun to surf in test form in the home American market, merchandising has made the greatest strides in this wave of change with the diversification of its offerings in plans to offer a myriad of more styles in smaller quantities. As of now, Hollister is treading on path to become a fully-fledged fast-fashion retailer.

The repositioning of Hollister Co. as a fash-fashion retailer comes from the felt need to adapt to the fast-fashion format which has now risen to mainstream prevalence in the mid-2010s. Multitudinous, trendy, fashion-forward, offerings – with satisfactory quality and brought out in alternating continuous speed at affordable prices – have become the preference for everyday youths in this post-Recession era. It's what's "cool" now and it is a striking difference compared to the classic yesteryears when exclusivity, high-price points, heritage, and iconic logoing with a privileged-belonging-to-a-group mentality was used to broadcast cool. Although moderately priced, Hollister, specializing in classic styles, was nevertheless considered an "expensive" brand appropriately priced within its target consumer audience to uphold its image of quality and exclusivity in teen retail. However, that format is no longer able to sail ahead of the game with the volatile winds of teen consumerism now in the favor of the fash-fashion structure.

At the end of the Fiscal Year 2013 (February 1, 2014), Hollister figured a 14% decline in comparable store sales – the lowest considering the FY2013 -10% comps at Abercrombie & Fitch and -4% at abercrombie kids.

The greater picture to secure the future of the Hollister division is to have it appropriately remolded to stand robust with the times in its targeted teen sector. This is being directed to translate to a sharp adaptation of what works in this day and age in that field. It will bring about a furthermore heightened differentiation between Hollister and the Abercrombie & Fitch brand...the latter being focused on reconnecting fully with young adults and keeping inline with its premium edge so that Hollister Co. will stand in contrast as a fast-fashion teen retailer.

Abercrombie & Fitch Co. is currently working with Herbert Mines Associates Inc. to specifically lock-in on an individual with keen awareness of fast-fashion for the position as president of the Hollister division. Prices will lower-down beginning in the latter-half of 2014 and in process is work in looking to readjust the supply chains to meet "fast and responsive" with the transition into the fast-fashion format.

Glenn Wellington, Chief Investment Officer at Engaged Capital (the out-of-the-blue and now-infamous investment firm notoriously outspoken against recent A&F operations and always in spotlight at every turn of events), remarked, "[The A&F] board doesn't have the credibility to make the determination that Hollister should be a fast-fashion retailer or that Mike Jeffries should be leading the turnaround. [The division could] differentiate itself without changing what the core brand is."

The recently appointed Non-Executive Chairman of Abercrombie & Fitch Co., Arthur C. Martinez, had sat down with Wellington and expressed that CEO Michael "Mike" S. Jeffries has the full support of the board. Martinez is rightfully adamant on the fact of Mike as a historic icon of retail made and stated Mike's eagerness to oversee the greater transition phase: "When the time comes, he wants to leave on a high note."

Securing stable internal succession for the position of A&F CEO is a top priority in this critical new period and succession-capability is among the criteria for the pending positions of president of an A&F Family division. In the near-future, it could be the A&F President or of this new up-and-coming HCo...

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News Now! | Abercrombie & Fitch Corporate Governance 2014 Revisions...

Mike leaving after a visit to A&F Paris which recently suffered from fire damage.
Image used for illustrative purposes only.  |  (image source)

         IN CONTINUANCE OF game-changing actions to improve and optimize the health of its corporate organism during these unprecedented critical times, Abercrombie & Fitch Co. has now executed new landmark adjustments to its corporate governance. In effect, these "enhancements" are in furthermore intent of alleviating the alarming investor pressure and of warding off any of its potential undesired consequences.

In a historic move for leadership in the modern Abercrombie & Fitch era, the joint position of Chairman & Chief Executive Officer (CEO), under the incumbance of one exectutive, has now been split apart. Hitherto this decision, the joint position gave the incumbent executive – namely, Michael "Mike" S. Jeffries – sharpened omnipotence over the entirety of the corporate body as, in combination of being CEO in top-rank over all corporate operations, he also sat in and chaired the Board of Directors which oversees the activities of the Company. Thus, while the positions of a Chairman and a CEO separate allow for a sort of heightened corporate checks-and-balances system, the joint office of Chairman & CEO granted, as aforementioned, significant omnipotence which has now been diluted.

Henceforth, Mike will now remain exclusively in his pivotal role as CEO in line with his newly revised employment agreement and will continue to hold his seat on the Board of Directors. Meanwhile, newcomer to the Company, Arthur C. Martinez, has been named as the new (Non-Executive) Chairman of Abercrombie & Fitch Co.

" Arthur Martinez brings extensive sector expertise, deep boardroom experience, and valuable perspectives to the new role of Non-Executive Chairman. I am confident that he is the right choice to lead the Board of Abercrombie & Fitch as we execute against our strategic plans and move in to the next phase of the Company's growth. " – Mike, 28 January 2014

As Non-Executive Chairman, Martinez now sits and leads the A&F Board of Directors and can provide, by general definition of the office, advice to the CEO though Martinez will not partake in the management of the Company.

" I am honored to join the Board of Abercrombie & Fitch and take on the role of Non-Executive Chairman. This is a company with iconic global brands, highly talented employees and tremendous potential. I look forward to working with Mike, the other members of the Board, and the management team to build on the Company's brand positioning and global appeal, and create long-term value for shareholders. " – Arthur Martinez, 28 January 2014

Along with this momentous development in regards to corporate governance, the A&F Board of Directors has been extended from nine to twelve seats with the introduction of Terry Burman and Charles R. Perrin apart from Martinez. ("Terry and Charlie also bring extensive boardroom and retail experience and, along with Arthur, will be outstanding additions to the Abercrombie & Fitch Board. I could not be more excited to welcome them to Abercrombie & Fitch," admitted Mike). As the Company stated, the individuals qualify as independent directors under the New York Stock Exchange listing standards. Independent directors are those who sit on the Board of Directors but do not have a material relationship with the Company or related persons, except for sitting fees, and own no company shares.

Furthermore, Craig Stapleton has been retired from his position of Lead Independent Director though he will continue on the Board and as Chair of the Nominating and Board Governance Committee.

Finally, Abercrombie & Fitch Co. has done away with its flip-in Shareholder Rights Plan. In such a plan, the company issues "rights" to shareholders to gain large numbers of stock when anyone nears more than the amount the target (the company) of the bidder (for a takeover) holds. In effect, the value of stock is diluted with a flood of stock at bargain and makes it expensive for the bidder to purchase enough stock to gain a majority hold to gain the target. Subsequently, the bidder finds the only way is to negotiate directly with the Board or abandon. This is why a shareholder rights plan is called a company's "poison pill" in the industry.

However good it may sound for its defensive reasons, shareholders rights plans are manipulative, controversial, and the legality of the practice is shaky in matters of messing with stock – it is blocked against by the UK's Panel of Takeovers and Mergers which defines itself with the "central objective [to] ensure fair treatment for all shareholders"; frowned upon and on uncertain ground in continental Europe; and in the United States, among others in the nation, the Supreme Court of the state Delaware has itself upheld shareholder rights plans as valid since 1985.

It just so happens that the modern Abercrombie & Fitch Co., while holding headquarters in New Albany, Ohio, was initially incorporated in 1996 (back when it first went public) in Delaware where a majority of American public companies are incorporated. More to the point: in late-2010, Abercrombie & Fitch wanted its shareholders to approve a reincorporation in Ohio for the Company where, instead of Delaware's 15%, the trigger for poison pills is at 10%. The Company made this move at a time which Steven Davidoff for The New York Times noted as being when "news is announced in the hope that no one will notice" and furthering that "[you] can’t help but think that this was Abercrombie & Fitch’s intention with its filing" (and it, too, did not even issue a news release). The Company had listed three other reasons first – all of which Davidoff found unconvincing and questionable – before it stated in the fourth reason that "reincorporating into Ohio would provide the company with an opportunity to address a number of corporate governance matters in a manner that we believe appropriately protects and benefits the company and its stakeholders." And that Davidoff interpreted as the real reason for the reincorporation plan: stricter control over potential acquisitions. ANF stock subsequently took a great decline (which lasted for a month) after having experienced its highest peak since the stock's plunge during the Great Recession. The Company remains incorporated in Delaware.

Now during these trying times, and in light of continuous epic changes in search for a betterment of its fortunes during this difficult situation, on Monday, 27 January 2014, Abercrombie & Fitch Co. executed Amendment No.3 to the Rights Agreement, under Delaware law, and set the termination date to its Shareholder Rights Plan to January 28.

The termination of the A&F Shareholder Rights Plan changes the game and "could [now] make it easier for the company to pursue a sales process [...or also] make it easier for any potential buyer to come in quickly and take the company private.."

By the midmorning trade on the NYSE, ANF stock rose to US$36.84 (+6%).

Richard Jaffe (of the full-service brokerage and investment banking firm, Stifel) stated:

" The new board members have demonstrated an openness and willingness in the past to explore all opportunities that are in the best interest of shareholders, and we believe that will be the case for Abercrombie. "

Engaged Capital (which has been the most vocal in terms of its gross disapproval of Mike's leadership and called for his sacking before his contract revision) expressed over the entirety of the actions:

" While a good first step, we believe these reactive changes alone will not be sufficient to put the company back on a course towards creating shareholder value,” the firm said. “It is imperative that the board, independent of management, objectively evaluate value-maximizing strategic and organizational changes at all times, and not just when convenient to placate shareholders. "

And Simeon Siegel (of New York-based Nomura Securities) also opined on the overall changes:

" This is just a continuation of their response to the Engaged [Capital] letter, and this is [the Company's] way of ‘ousting’ him in deference to Jeffries and what he’s done historically for [Abercrombie & Fitch]. This seems like a political way of saying let’s gradually take away power. It’s further support for the notion that Abercrombie is becoming more shareholder friendly. "

The last word on this landmark greater matter, however, should be given to Stapleton of A&F who, on a firmly positive note, surmised:

" These significant changes demonstrate the Company's ongoing commitment to being a leader in corporate governance best practices and responding to shareholder concerns. The Company will continue to review additional corporate governance enhancements as part of this commitment. "

We are in the beginning of a #NewFuture, indeed...

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P.S. You can now follow the performance of the ANF stock – since its IPO to up-to-the-moment – with our interactive, immersive chart at the bottom of our site!

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News Now! | Abercrombie's Mike Jeffries CEO Contract, New Leadership Initiatives....

Mike leaving after a visit to A&F Paris which recently suffered from fire damage.
Image used for illustrative purposes only.  |  (image source)

         MORE DEFINING DEVELOPMENTS have now made their resounding effect as we experience the storming development of an unprecedented transition phase at Abercrombie & Fitch Co. While the most significant and multitudinous future initiative aspects were addressed along with the Q3 FY3013 results (see the post here), those were more so contained within the operating fields of retail, direct-to-consumer, merchandising, and international expansion efforts. However, of the most pivotal of matters overall in heated reconsideration has been the state of leadership at the Company. After a long-term period of indepth assessment and discussion, the Board of Directors has finalized its deliberations...

Michael "Mike" S. Jeffries is to retain his position as Chairman & CEO of Abercrombie & Fitch Co. upon the 2 February 2014 activation of the all-new "2013 Agreement" which was finalized on December 9 of this year. Henceforth beyond 1 February 2015, Mike is susceptible to remain although the contract – now focusing primarily on performance – may be expired within a 12 month notice by either Mike or the Company...

" Today's announcement is the result of an extensive review by the Board and detailed discussion with shareholders over several months, and the specific terms of Mike's new contract reflect direct feedback from those discussions. The new agreement employs a more simplified, performance-based compensation structure that is designed to align incentives closely with the success of the company and the interests of shareholders. Mike is a visionary in this industry and has been responsible for reinventing, creating and evolving today's Abercrombie & Fitch and Hollister brands. Under his direction, Abercrombie & Fitch has grown from just 36 domestic stores and $50 million in sales in 1992 to having a global presence and over $4 billion in sales today. Mike and his team have developed a long-term plan that builds upon past successes, while targeting the specific challenges that the company faces today. We believe he is the right person to embark on this plan, which we believe will deliver substantial and sustainable value. " – Craig Stapleton, Lead Independent Director of the Board

As set forth in this new 2013 Agreement as filed on December 9 in a Form 8-K with the Securities and Exchange Commission, Mike will be receiving his current annual base salary of US$1,500,000 under annual review; will still take part in the Company's annual bonus plan allowing him a 150% annual target bonus opportunity and 300% maximum bonus opportunity of base salary; entitled US$10,000,000 life insurance coverage and employee benefit programs and senior officers' arrangements; personal usage of up to US$200,000 of the corporate aircraft for "security purposes"; and eligibility to A&F Supplemental Executive Retirement Plan benefits.

However, this time around, Mike is afforded no retention or sign-on grant and the 2008 Agreement semi-annual equity grants structure has been done away with. Mike is now only eligible as recipient for annual long-term incentive awards with a US$6,000,000 target value susceptible to yearly review and, should performance justify, the Compensation Committee may also allow an increase by its sole discretion. In regards to individual, annual long-term incentive awards, discretion by the Compensation Committee in basis of performance will also determine an at-minimum 60% vesting.

In regards to possible variables of ending employment:

• Should the 2013 Agreement terminate in subsequence of the set expiration date (by mutual consent between Mike and Company), by A&F Co. for Cause, by Mike for anything other than Good Reason, or for Retirement, the Form 8-K states that Mike is entitled to "his then current accrued and unpaid base salary through the date of termination; any earned or accrued and unpaid bonus or other incentive compensation for any completed fiscal years preceding the year of termination; any previously deferred compensation, reimbursement of reasonable expenses; and any other benefits and payments to which he is then entitled under the Company’s employee benefit plans (collectively, the “Accrued Compensation”)." Furthermore, circumstances for long-term incentives accelerated venting have been limited unlike in the 2008 Agreement. If agreement ends because of anything other than Good Reason or for Retirement, Mike would also forfeit unvested long-term incentive awards that were granted to him at least two years beforehand "unless the Compensation Committee determines otherwise." To become fully vested upon termination date will be any unvested long-term incentive awards held by Mike: "to the extent such awards contain performance-based vesting criteria, vesting will occur at the end of the applicable performance period and vesting will be based on actual performance over the entire performance period."
• Should the 2013 Agreement terminate by A&F Co. without Cause, or Mike for Good Reason before a Change of Control and subject to personal general claims release execution, Mike will be entitled to: "Accrued Compensation and will continue to receive his then current base salary and medical, dental and other associated welfare benefits for two years after his termination date. [Mike] will also receive an additional payment equal to 150% of his salary pro-rated for the portion of the year of termination that he was employed by the Company. The Company will also continue to pay the premiums on [Mike’s] term life insurance policy until the later of the last day of the Term or the last day of his welfare benefits coverage." If agreement ends because of Good Reason before Change of Control, Mike would also forfeit unvested long-term incentive awards that were granted to him at least two years beforehand "unless the Compensation Committee determines otherwise." To become fully vested upon termination date under this circumstance also will be any unvested long-term incentive awards held by Mike: "to the extent such awards contain performance-based vesting criteria, vesting will occur at the end of the applicable performance period and vesting will be based on actual performance over the entire performance period."
• Should the 2013 Agreement terminate by A&F Co. without Cause, or Mike for Good Reason within two years after a Change of Control and subject to personal general claims release execution, Mike will be entitled to: "same severance benefits as those payable prior to a Change of Control, except that his two years of base salary will be paid in a lump sum rather than ratably over the term of the two years."
• Should the 2013 Agreement terminate under the circumstance of disability, Mike is entitled to: "[receiving] Accrued Compensation and will continue to receive his then current base salary for 24 months following the termination date and 80% of his base salary for the third 12 months following the termination date (reduced by any long-term disability insurance payments he may receive) and medical, dental and other associated welfare benefits during that time period. In addition, each outstanding long-term incentive award held by [Mike] will become fully vested either as of the termination date or, with respect to awards with performance-based vesting criteria, at the end of the applicable performance period and vesting will be based on actual performance over the entire performance period. The Company will also continue to pay the premiums on [Mike’s] term life insurance policy until the later of the last day of the Term or the last day of his welfare benefits coverage."
• Should the 2013 Agreement terminate under the circumstance of Mike's death, "his estate or his beneficiaries will be entitled to receive the Accrued Compensation and pro rated target bonus for the year of termination. In addition, each outstanding long-term incentive award held by [Mike] will become fully vested either as of the termination date or, with respect to awards with performance-based vesting criteria, at the end of the applicable performance period and vesting will be based on actual performance over the entire performance period."

Under the 2013 Agreement, as in the prior 2008 one, should whatever termination occur whenever, Mike would henceforth be prohibited for one year from soliciting Abercrombie & Fitch Co. employees and customers and also from competing with the Company. Furthermore, Mike would continue to be subject to a standard confidentiality covenant.

The finalization, filling, and press release comes days after Engaged Capital (an investment firm with major shareholdings at Abercrombie & Fitch Co.) expressed its attitude towards Mike in a very direct, bold letter to the A&F Board of Directors. The letter recognizes Mike as having been crucial for the global rise of the Company and for giving it the most valued brands in youth retail, Abercrombie & Fitch and Hollister Co. However, it openly shares that Engaged Capital invested in the Company primarily because it believes it to still be deeply undervalued despite the brands' current stance and that there is more beneficial potential to be realized. It cites the vulnerably expansive retail footprint created in the 2000s, and investment in it in the domestic American market, only to be suffering impacting consequences in the 2010s: "years of store closures and asset impairments"; pale operating margin; deteriorating, poor return on investment; asset impairments and operating losses of up to US$500 million in the most recent six years; and up to 35% of Company stores to be closed by Fiscal 2015. Also noted among many more things were the so-called "high-risk" flagship store strategy; the costly failure of RUEHL No.925 and Gilly Hicks; and Mike's US$140 million compensation in five years with -31% five-year total shareholding returns in that same period. All of it is blamed on poor leadership: "Given the Company’s history of operational missteps, taken together with Mr. Jeffries’ age and his increasingly controversial reputation, the Board must not let this [contract expiration] opportunity pass."

As the letter posited, "With ample evidence of dissatisfaction and persistent underperformance on almost every credible measure, shareholders can only wonder how the Board has remained oblivious to their concerns; or worse, why the Board remains so obstinate in its defense of Mr. Jeffries?"

Well, as C.E.R. (Editor-in-Chief of The Sitch on Fitch) singularly stated – as published in the early-November Q3 FY2013 evaluation gone viral – against others' overtly critical reports, "[Mike] is rather much needed to oversee stabilization throughout this transition[.]" And as Stapleton on the A&F Board of Directors echoed in the December 9 press release, "[...Mike] is the right person to embark on this plan, which we believe will deliver substantial and sustainable value."

"I am honored to lead Abercrombie & Fitch forward, augment the best team in the industry, and capitalize on the value of our iconic brands. We are taking aggressive action to manage through the challenging teen retail environment by increasing our speed to market and enhancing our brand engagement. We are also focused on completing the restructuring of our cost base and ensuring we are properly organized to execute against our long-term plan. We are adapting to changing markets and consumer dynamics to drive top-line growth, and I am confident that we are taking the right steps to deliver value for shareholders. As ever, I am grateful to our team of dedicated and talented Abercrombie & Fitch associates and to the Board for their guidance and support." – Mike, 9 December 2013 press release

As time progresses, the new strategy will foster the development of internal candidates for successor planning.

Furthermore, the Company is now anticipating the creation of individual president positions for the Abercrombie & Fitch, abercrombie, and Hollister Co. divisions. External candidates to bring in their utmost expertise and freshness will be searched for in collaboration with Herbert Mines Associates. As Stapleton shared, "Abercrombie & Fitch has always been highly focused on recruiting and cultivating the best talent for the company's success, and we believe that these new senior additions to the management team will help the company achieve its potential. These new leadership positions will provide fresh perspectives on brand development as well as deepen our bench of talent at this critical time. The Board fully supports the long-term plan that Mike and the management team have developed and the value that this plan and the actions we are taking will deliver for shareholders."

On a concluding and very sentimental note, Leslee Herro will finally be retiring in spring 2014. Leslee has been with the Company since even before the appointment of Mike as president and the subsequent, historic 1992 Revolution of Abercrombie & Fitch. Do to her strong value and wisdom, she will remain at the Company in a non-named executive officer capacity for an unspecified period and offer "advice and counsel to the company's Leadership Team and completing certain special projects." On her departure, Mike beautifully expressed, "Leslee has been an incredible [business] partner to me for the past 22 years. Her deep insights in to the business, strong sense of culture, and constant good humor will be sorely missed by me and everyone else with whom she has worked. Abercrombie & Fitch will never be quite the same without Leslee, and she will always be part of the Abercrombie & Fitch family. We wish her all the best as she chooses to focus on her own family."

Ultimately, these are very critical times only to become more so within the following months. All we can do is stand firm in support as things progress in ensuring the continuation of the legacy of Abercrombie & Fitch as a champion of all-American achievement...

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PHOTO EXCLUSIVE! | Mike Jeffries in Munich for Abercrombie & Fitch...

Mike is a very elusive man...but no man with great brilliance can elude his own shine...

Our German correspondent in Bavaria has been visiting Sendlinger Straße (Strasse) periodically since this past weekend, and she spotted more than just boy-toys outside A&F Munich! As she recalls, the Chairman & CEO of Abercrombie & Fitch came out and shook hands with about four of THE HOTTEST GUYS - one of those gentlemen was our boy-toy Chris Evans - before quickly disappearing. But to bad for Mike for he did not escape from the eyes of our correspondent. She was lucky enough to capture Mike in the following two photo exclusives...

 

A good point our correspondent makes is that rarely do people recognize that the genius of Abercrombie & Fitch is right in front of them whenever he makes appearances! We send a warm thank you to our girl who will be in Munich up to the opening of the third A&F Flagship in Germany! Obviously, she'll be the source of much more photographic goodies to come exclusively on The Sitch on Fitch...

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Both photos in this post were taken by the German correspondent of The Sitch on Fitch in Bavaria. Photos are owned by the correspondent and The Sitch on Fitch, and they may not be used/altered without permission.

Uncovered Document Reveals Abercrombie Chairman & CEO Mike Jeffries' Private Male Model Demands and New Insights Into His Personal Life...

Mike photographed at the National Retail Federation conference in New York City, 2012.
Photo by Mark Lennihan/AP Photo  |  (image source)

Since his revolution of Abercrombie & Fitch, Micheal "Mike" Jeffries has become known for his genius and his eccentricity. The man is the 68 year-old head of a globally iconic, youthful, multi-billion dollar Company which he presides over with a personal, thoroughly obsessive iron fist...Mike is A&F...A&F is Mike. Simulating youthfulness in physicality and mind, he maintains his hair blond and is no stranger to the word "dude." It can well be said that sometimes genius and eccentricity in character do go well hand-in-hand, but it is no partnering unaccustomed to misunderstanding, misinterpretation, and controversy.

Recently, an eye-raising document – the so-called "Aircraft Standards" manual – has surfaced from a age-discrimination lawsuit filed in 2010 by then-53-year-old pilot Michael Stephen Bustin. As Bloomberg Businessweek reported, Abercrombie & Fitch Co does not directly employ any pilots, but Bustin claims he was replaced purposefully by a younger pilot for Mike. Now while the Company holds that the lawsuit is of no value, Mike's demands have once again fallen under scrutiny....because of the contents of the aforementioned manual.

The 40+ page manual was composed by Matthew Smith - a man not employed by Abercrombie & Fitch Co, but who heads the Jeffries Family Office, an Ohio limited liability corporation founded circa 1998, which oversees the personal assets and interests of Mike. As an individual who is not a part of the Company, Matthew is nevertheless given quite deep insights into the Company's operations. He is even given detailed information on daily sales of the Company overall, and by brand, as well as other non-public corporate material. Matthew is described as a "live-in partner" of Mike's which can mean in general an arrangement between two unrelated people who purchase a home, sharing responsibilities for said property, and there may or may not be further commitments between the members of the partnership within the context of whatever their relationship may further be.

This manual was of the Jeffries Family Office, as being authored by Matthew, and it contains a set of rules, specifications, and conditions for those who are hired to serve Mike and Matthew. When it comes to the US$50 million Gulfstream G5550 Abercrombie & Fitch corporate jet, the Jeffries Family Office is responsible for the maintenance, operation, and staffing; it contracts onboard staff and "recommends" them to A&F for the jet. The Company then in turn contracts the recommended people. The New York City-based company Cosmopolitan Management LLC (see here) provides models and "actors" involved who surround Mike and Matthew and who must comply to the manual. A&F pays salary and travel expenses for four of such employees while onboard with Mike on the A&F corporate jet. Cosmopolitan Management also provides Mike and Matthew with house staff managed by the Jeffries Family Office.

The following are some of the disclosed demands from the manual that pertain to male models serving Mike...

• Must be clean-shaven and smelling of a specified A&F cologne
• They must wear a "uniform" which even includes what underwear to wear. This uniform consists of an A&F polo, boxer briefs undies, jeans, and flip-flops. When the temperature drops below 50 degrees Fahrenheit (10 degrees Celsius), they must wear an A&F jacket zipped up to the fourth lower button, the bottom button left unbuttoned, and the collar should be popped up. A drop to 40 degrees Fahrenheit (4.4 degrees Celsius) or below requires hats with the brim folded two inches. Other accessories include wearing a belt, gloves (when necessary), and having certain A&F cologne. Matthew described the uniform for the jet crew as being like that of an A&F Flagship "doorman".
• Absolutely no jewelry with the only exceptions applying to watches and wedding rings.
• When responding to a demand from Mike, Matthew, or one of Mike's "entourage", the models are to respond by saying, "No problem." Not by saying "sure" or "in a minute." The response is to be "no problem."
• When on the jet, they are to spray the bedding with "sleep spray" before the entourage take a nap.
• When serving at home, they are instructed not to expose toilet paper nor fold the end square.
• Black gloves are to be used when handling the silverware and white gloves are to be used when laying the table (this presumably being for at home, but could also include when dining onboard the jet?).
• Furthermore, Matthew has the models serve him Assam tea in the morning and Darlingjee tea at precisely 2:00PM on a "small tray with a small tray liner."

In addition, Mike travels with his three dogs – Ruby, Trouble, and Sammy. The seating arrangements on the corporate jet are set according to which of the dogs are traveling onboard. Ruby is to sit in Sammy's seat found opposite of Mike when only Ruby and Trouble come onboard. Ruby is then to sit in Trouble's seat when Sammy flies with them. (But then can only two of them fly at the same time?) There is even a reference to a "houseman" who handles boarding the dogs on the aircraft.

Other miscellaneous things are: the song Take Me Home (not clear whether Cher's or Phill Collin's version, but honestly which do you think?) is to he played when passengers board the aircraft; staffers must ensure that the aircraft is spotless with no fingerprints; there must be arranged flowers; when serving food, salt and pepper shakers are to be placed in the center of serving trays; and the seat buckles must be meticulously folded.

Mike prior to the opening of A&F Hong Kong.

Mike's most recent notable flight was in August 2012 when he flew in for the grand opening of the first Abercrombie & Fitch-branded location in China – the highly successful and most publicized A&F Flagship in Hong Kong's Central district.


During the years of consecutive profits, Abercrombie & Fitch Co did not question Mike's personal eccentricities and demands, nor his positive, yet bold and risky, management of the Company. However, since the Great Recession took a toll on the Company in the late-2000s, he has fallen under heavily scrutiny. His contract was renewed in 2008 and it limited for the first time his usage of the jet. That year alone, he figured US$1.1 million in expenses with the jet, and he had averaged US$850,000 a year between 2006 and 2008 on personal use. By 2010, the Company's board paid him US$4 million to agree to a limit of US$200,000 for personal use – a dramatic limit from the prior years. But more recently within the past month, a takeover of Abercrombie & Fitch, by a private-equity firm, was rumored as Ralph Whitworth’s Relational Investors LLC sought changes in A&F operations. Any takeover could have resulted in stripping Mike of his leadership. That would have cost the Company US$105.6 million in payment to Mike for removing him...that and Mike would not allow for a takeover.

Mike's contract with Abercrombie & Fitch Co is set to expire in 2014. To be renewed or not, that is the question. And many at A&F carry worries from what Boomberg Businessweek quoted as being a "leadership vacuum perspective." Craig Stapleton, currently on the A&F board of directors and a former United States ambassador to France, has stated that Abercrombie & Fitch "has a great number of talented individuals throughout all key operational areas. The talent pool for successors, not only of the CEO but also other key executives, is deep." Nevertheless, Mike is the founder of the modern A&F and a departure from such a monumental leader is never one with easy. So let's raise our FIERCE cologne bottles to Mike and the continuance of his genius and eccentricity at the helm of Abercrombie & Fitch...

Stay FIERCE!

PHOTO EXCLUSIVE! A&F Chairman & CEO Mike Jeffries at Abercrombie & Fitch Hong Kong!!!

He revolutionized Abercrombie & Fitch into being THE HOTTEST BRAND in the world! You love A&F and its spin-off brands abercrombie kids, Hollister and Gilly Hicks? Well, then, you should be forever grateful for the brilliant GENIUS that is the A&F Chairman & CEO, Michael "Mike" S. Jeffries!

So monumental is the coming of Abercrombie & Fitch to the Chinese market that Mike himself is in Hong Kong to oversee the historic event! This is BIG! A wonderful contributor of The Sitch on Fitch, in Hong Kong, was at the Pedder Building on August 7 (HKT) and she got an exclusive snapshot of Mike!!!

Take note that Mike (as he prefers to be called) rarely makes public appearances or interviews. That we were able to get this photo of him is a miracle! WE LOVE MIKE!

Anyway... For months now, we've been talking about how monumentally important for the Company is the opening of Abercrombie's first store for China. A&F, with its heritage of privilege and modern all-American Casual Luxury, must make a perfect impression upon the globally-significant-and-influencial Chinese market voracious for upscale foreign goods with high-status. We're not doubting A&F will make its mark in China and history will be made!

After introducing Mahjong to American culture, and making Abercrombie & Fitch the focus of the Mahjong craze, Ezra Fitch personally traveled to China in the early-20th century to oversee the translation of the game's Chinese instructions into the English language... Now, in the 21st century, Abercrombie & Fitch will finally open its first doors in China... It's an event the current revolutionary head of the Company, Mike, cannot miss!

Stay FIERCE!

The Sitch on Fitch thanks its contributor in Hong Kong for the photo exclusive! This photo is owned by The Sitch on Fitch HK contributor, F.L., and it may not be used without permission by the author.

UPDATE (11 AUGUST 2012): A&F HONG KONG NOW OPEN!!! READ: FIERCE EUPHORIA! ABERCROMBIE & FITCH HONG KONG FLAGSHIP HAS OPENED ITS HISTORIC DOORS...