- Last Updated: 12:54 AM, July 11, 2012
- Posted: 11:31 PM, July 10, 2012
Abercrombie & Fitch CEO Mike Jeffries is getting ready to blink.
The hard-charging teen-apparel tycoon — long famous for staring down shareholders who have questioned his lavish compensation and stratospheric spending on fancy flagship stores — is preparing to launch a massive share buyback to appease investors, sources told The Post.
The exact size of the repurchasing program couldn’t immediately be determined. Still, a source said it will be a “material increase” over the board’s current authorization to repurchase 12.9 million shares, or about 15 percent of the company’s float.
What’s more, insiders said Jeffries is considering reining in the retailer’s aggressive and expensive European expansion, which has been a bone of contention with investors as a credit crisis has sapped demand for Abercrombie’s pricey preppy fashions.
“Pushing into Europe may or may not be a smart move long term, but it’s eating up cash, and it’s hammering the stock price,” one Abercrombie shareholder complained.
The retailer is expected to announce its plans on or before its next quarterly earnings report in mid-August, sources said.
Abercrombie officials didn’t respond to requests for comment yesterday.
Over the past year, Abercrombie shares have fallen out of fashion on Wall Street. In May, the stock plunged 13 percent in a single day after the chain reported its first quarterly drop in comparable sales in more than two years, dragged down by Europe.
Yesterday, Abercrombie shares closed at $32.77, not far above a 52-week low of $29.51 hit on June 25. The stock has tumbled steadily since reaching a 52-week high of $78.25 on July 21, 2011.
Jeffries’ unhappy shareholders have included veteran cage rattlers Dan Loeb and Ralph Whitworth. Loeb — whose hedge fund Third Point spurred the ouster of Yahoo!’s CEO this spring — listed Abercrombie as one of his biggest-losing investments in recent letters to clients.
It’s unclear whether Loeb and Whitworth, who each reported Abercrombie stakes of more than 2 percent as of March 31, are still investors in the retailer.
A spokeswoman for Third Point declined to comment. Whitworth, whose firm Relational Investors has prodded high-profile targets including Hewlett-Packard and PepsiCo, declined to comment.
Nevertheless, top execs at Abercrombie “got an earful after that last earnings report,” according to one insider briefed on the situation, referring to angry phone calls from investors who were surprised by Europe’s damage to quarterly results.
“(Management) seemed tone-deaf to me, like they had no clue what’s going on in the world,” one shareholder groused.
Rumors swirled this spring that Abercrombie had been approached by a prospective buyer, and that Jeffries was weighing the idea of taking the company private.
However, the current plan to step up share buybacks makes such a deal less likely, insiders said.