On Wall Street, Mike Jeffries isn’t one of the cool kids anymore.
The 69-year-old Abercrombie & Fitch CEO — who got blasted this spring for saying he only wanted “the cool and popular kids” shopping at his stores — is increasingly reviled by investors as the teen retailer’s business flounders.
A&F shares plunged 17.7 percent yesterday after the mall-based clothing chain delivered dismal quarterly results and gave a grim outlook for the fall season.
On a conference call with analysts, Jeffries admitted teens haven’t been flocking to Abercrombie stores the way they used to — and was hard-pressed to say why.
“The reasons for the weak traffic we’ve seen in the US are not entirely clear,” Jeffries said.
The blond, blow-dried exec — who has gotten heat in recent years for lavish perks and pay packages he has taken through the company’s ups and downs — guessed that jobless, cash-strapped teens have been diverting what little funds they have into smart phones and tablet devices.
Indeed, a Gallup poll said yesterday that unemployment rose to 8.6 percent in August, its highest level in 18 months. Rival teen retailers, like Aeropostale and American Eagle Outfitters, have likewise seen their stocks clobbered on miserable second-quarter results.
Nevertheless, investors weren’t inclined to cut Jeffries a break.
“His answers were a lot of non-answers,” one fund manager griped after his Abercrombie investment got smacked yesterday.
“If Jeffries got fired, the stock would go up 10 percent,” another trader said after bagging a profit by betting A&F shares would fall.
Disaffection with Jeffries has grown along with worries that the retailer’s days of selling casual preppy clothing at stratospheric prices are over for good.
Jeffries is credited with transforming A&F into a teen-clothing powerhouse in the early 1990s after the chain spent a century as a hunting and fishing accessories boutique.
Abercrombie has prospered for most of the past two decades, but its operating margin is now at half its historical peak. The company isn’t likely to regain that ground, says Stifel Nicolaus analyst Richard Jaffe.
On its website yesterday, all jeans and hoodies were being hawked at 50 percent off.
In addition to lackluster fashions, Jaffe blames “the diminished appeal of the brand.”
Janney Capital Markets analyst Adrienne Tennant said she has “lost faith in the turnaround,” raising doubts that Jeffries’ plans to slash costs would be enough to offset continued sales declines — a signal that the chain is losing customers to competitors.
A&F’s second-quarter profit dropped by a third — far worse than analysts’ forecasts — and the retailer warned the third quarter’s profits will be less than half what Wall Street expected.
In a note titled, “Umm, Where are the Rest of Abercrombie’s Earnings??,” Belus Capital Advisors analyst Brian Sozzi predicted Jeffries will be replaced next year when his contract expires.