12/10/2013
By David Urani

This week has been a big one for CEOs, with a few notable management changes taking place for varying reasons. Three moves from ANF, LULU and GM cover a whole spectrum of despicable to commendable decisions.

Yesterday it was Abercrombie’s (ANF) surprise re-signing of CEO Mike Jeffries. This one is notable in that Jeffries has been terrible, both from a business and a PR standpoint. Abercrombie under his leadership has trailed the S&P 500 over the last five years, and is down 28% in the past year. Likewise, ANF’s bottom line showed a $15.6 million net loss in Q3. Some of that underperformance can be attributed to Jeffries’ own statements smearing the company’s image, with the revelation that Abercrombie doesn’t sell products for larger customers because they weren’t ‘cool enough’ in his words.  This is one of the first CEOs I would have named to get the boot but amazingly they’re extending his contract for another year. Add to that, he’s one of the most overpaid CEO’s around, having pulled in as much as $48 million in 2011. Bad move, Abercrombie.

Lululemon (LULU) has had its own bit of controversy this year, beginning with the black yoga pants that turned see-through when stretched. Performance since then has floundered and now that’s  turned into the end of the road for CEO Christine Day. Contrary to ANF’s Jeffries, Day has been overseeing a great blossoming of the Lululemon brand over the past few years. Overlooking the see-through pants, which may be more the fault of their product developers than Day herself, I’m not totally convinced she had to go. Also, she’ll be replaced by Laurent Potdevin, who is the former president of TOMS shoes who I wouldn’t write off but doesn’t necessarily strike me as a rock star but we’ll see. There’s also the case of Chairman and founder Chip Wilson who had his own Jeffries-esque moment when he said the see-through pants were the fault of the customers being too full figured for their sizes. Wilson has stepped down.

And while Jeffries and Wilson perhaps set up social barriers, General Motors (GM) has smashed one in a noteworthy move. A day after the government exited its remaining stake in GM (for a $10.5 billion loss) CEO Dan Akerson has been replaced for personal reasons. The new GM CEO will be Mary Barra, who not only becomes the first female to run a major auto company but generally it’s an industry where you don’t see many female execs. She’s been with GM for more than 30 years and in the last 22 months has been overseeing product development with great success. I can’t argue with that, GM was the highlight of the latest November auto numbers at a 14% gain year over year. She also beat out a couple of other highly qualified male executives for the seat. Best of luck to Mary and good riddance to the government.

David Urani
Wall Street Strategies

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