Abercrombie Board Fight Comes Just Before Earnings

Abercrombie has fallen out of favor with teen shoppers, which has led to three consecutive quarters of declining sales. Last year, Engaged pushed for CEO Michael Jeffries to be sacked.

Under pressure, Abercrombie agreed in January to separate the CEO and chairman roles and to increase its board from nine members to 12. But that was not enough for the activist investor.

This new push from Engaged comes less than a week before Abercrombie is scheduled to report fourth-quarter and fiscal 2014 results. Analysts are looking for earnings per share (EPS) of $1.04 for the quarter and $1.62 for the year. That would be down year-over-year by more than 48% and 44%, respectively. But both consensus estimates have risen in the past 60 days — from $0.90 for the quarter and $1.47 for the year

The consensus forecasts also call for revenue to have shrunk 8.1% to $1.35 billion in the quarter, as well as 7.5% to $4.17 billion for the year. For the current quarter, revenue is predicted to have fallen less than 2%, but analysts also expect a net loss per share that is larger than in the year-ago period.

Glenn W. Welling, the head of Engaged Capital, said in a statement:

We need a board of independent leaders who can set a new direction for Abercrombie. For far too long, stockholders have suffered under the failed leadership of a board that has lacked the independence necessary to properly act as our fiduciaries.

Abercrombie said it has received the nominations and that it intends to review the candidates as it would any others. Arthur Martinez, Abercrombie’s non-executive chairman, said:

Abercrombie & Fitch is committed to continued engagement with its shareholders, including regarding corporate governance matters.

Abercrombie shares were inactive in premarket trading Friday, after closing at $34.59. The 52-week range is $31.14 to $55.23.