Arthur Martinez’s work is done at Abercrombie & Fitch Co.
The executive chairman will step down from his role at the end of the current fiscal year, which ends Feb. 3. He will retire as a director and be succeeded by Terry L. Burman as non-executive chairman. Burman is currently the lead independent director and chair of the nominating and board governance committee. The two both joined the board in January 2014, with Martinez servicing as non-executive chairman at that time. He became executive chairman in December 2014. Burman, 72, is chairman as of Tuesday morning. He is the former chief executive officer of Barry’s Jewelers, Signet and former chairman of Zale Corp.
According to Martinez, “My decision to step down as executive chairman and not stand for re-election to the board is part of a planned transition of the chairman role. With the company on a solid trajectory, this is the right time to hand over board leadership to Terry, who has outstanding credentials as a retail industry leader and is the right person to assume the role.”
News of Martinez’s decision Monday was disclosed by Abercrombie on the same day the company updated its outlook for the fourth quarter, making it the latest retailer to report solid holiday sales.
The retailer said it now expects net sales to be up low-teens, versus prior guidance of up mid to high-single digits, including the benefits from a 53rd week and changes in foreign currency exchange rates. Abercrombie also said it now expects comparable sales to be up high-single digits, compared to the prior outlook of up low-single digits. The company said it is also assessing the impact of the Tax Cuts and Jobs Act of 2017, but that it expects to recognize a significant income tax charge in the fourth quarter mostly due to the one-time deemed repatriation tax on accumulated foreign earnings.
Fran Horowitz, chief executive officer, said, “We are pleased by our performance across all brands and channels during the holiday season, with continued strength at Hollister, and the Abercrombie brand on track to deliver positive comparable sales for the quarter. Our customers remain at the center of all we do, and that singular focus has continued to drive both our brands forward.”
Shares of Abercrombie shot up 12.6 percent to close at $22.43 on Monday following the news of the fourth-quarter update.
Mark R. Altschwager, analyst at Baird, said, “We continue to have a more positive outlook on the retail sector in 2018, and acknowledge clear momentum at Hollister.” Abercrombie also scheduled an Investor Day on April 25; the analyst noted that the last analyst day was November 2013.
Martinez noted the “demonstrable progress” that Abercrombie & Fitch is making under Horowitz’s leadership. “We have built a first-rate team whose intense focus is on the customer, the revitalization of our brands and close management of expenses. [This helps] direct resources to omnichannel and marketing, [which] have enabled us to deliver sequential comparable-sales improvement,” the executive chairman also said.
Martinez, 78, was the ceo of Sears in the late Nineties, and has served on the boards of HSNi, International Flavors & Fragrances, PepsiCo and Kate Spade.
At the time that Martinez joined the Abercrombie board, activist investor Engaged Capital had been pushing former chairman and ceo Michael S. Jeffries to cede the chairman’s title as profits and sales were dropping amid the overall struggles within the teen sector. The company was also testing a change to its vertical model, and began testing the sale of its merchandise in third-party channels as well as bringing in select items from other brands onto Abercrombie’s Hollister web site. A few months into Martinez’s tenure, the company also shifted its organizational format, moving to a vertical structure with brand presidents instead of running the firm horizontally by product category.
He shifted to executive chairman when Jeffries retired from his ceo post in December 2014. In the years that followed, Abercrombie made a few key hires, including Aaron Levine from Club Monaco. In addition, Horowitz was promoted to ceo of the company and had been Hollister’s brand president.
Perhaps most notable was the shift by Abercrombie to be more inclusive, doing away with the preppy image created by Jeffries. The company also did away with the sexualized marketing of the late Nineties.
Hollister, under Horowitz’s leadership, was the first to see a remake of a strategy that brought the brand back to its California lifestyle. The company is following a similar strategy for its core Abercrombie brand, although efforts are also being made to skew the brand slightly older to differentiate from its younger teen and pre-teen sibling. The company last year began testing a new store concept for its Abercrombie brand and is either rolling out the concept to new stores or retrofitting some features to update existing stores. Earlier this month, the company also unveiled its new Abercrombie Kids unisex collection.