Jump to content

Mike Jeffries (businessman)

Page semi-protected
From Wikipedia, the free encyclopedia

Mike Jeffries
Born
Michael Stanton Jeffries

1943 or 1944 (age 80–81)
NationalityAmerican
Alma mater
OccupationBusinessman
Known forFormer chairman and CEO of Abercrombie & Fitch
Spouse
Susan Hansen
​
(m. 1971)​
PartnerMatthew Smith
Children1

Michael Stanton Jeffries (born 1943 or 1944)[1] is an American businessman who was chairman and CEO of clothing retailer Abercrombie & Fitch from 1992 to 2014. During Jeffries' tenure, he engineered a turnaround of Abercrombie & Fitch from a "fashion backwater" losing $25 million yearly to a lifestyle brand grossing $2 billion yearly by 2006, though this approach courted controversy with the advertising of semi-nude models, racially and sexually insensitive slogans, and the stance of marketing to "cool kids".[2]

In 2023, Jeffries was named in a civil class-action lawsuit which alleged that during his tenure as CEO of the company, he engaged in sex trafficking with over 100 young men, in exchange for promises of employment for coveted modeling spots, money, and drugs.[3] In October 2024, in a separate case, Jeffries was arrested and indicted by federal prosecutors on criminal charges of sex trafficking and interstate prostitution.[4]

Early life

Jeffries grew up in Los Angeles, the son of Donald R. Jeffries, who owned a chain of party supply stores.[2][5] Jeffries attended Claremont Men's College and the London School of Economics before receiving an MBA from Columbia Business School in 1968.[6][2][5]

Career

Early career

In 1968, Jeffries joined the management training program at Abraham & Straus, a Brooklyn department store which was owned by the umbrella corporation Federated Department Stores, which was rebranded Macy's in 1994 after that property was acquired by Federated. He worked for 12 years at Abraham & Straus, before moving to Bullock's in Los Angeles, owned by Federated, as executive vice president for merchandising. He then worked for three years at Federated headquarters in Cincinnati, Ohio.[7]

In 1984, Jeffries founded Alcott & Andrews, a brand targeted at career women.[7] The store fell into bankruptcy in 1989 due to over-expansion and closed,[8][9] with the New York Times noting that the store offered "too little variety in its merchandise."[10]

After the Alcott & Andrews bankruptcy in late 1989, Jeffries worked in merchandising at Paul Harris, a Midwest clothing chain that also went bankrupt, in early 1991.[11][2][10][12]

Abercrombie & Fitch Co.

Further information: Abercrombie & Fitch
A&F's "Models" opening a new store in 2012. Photo demonstrates the shirtless male hunk that characterized the store's "sexualized marketing" during Jeffries 22-year reign. "The marketing approach that made A&F into a financial success also made it an HR and PR nightmare".

Jeffries ran the company from 1992 to 2014 as CEO and chairman. During that period, he completely changed the brand, image and focus of the company, in a turnaround that proved extremely successful during the 1990s and early 2000s, albeit not without controversy. After a string of poor results from the financial crisis of 2007–2008 onwards, plus criticism related to the brand he created, he stepped down in 2014.

1990–2000s

Jeffries was hired in 1992 by Les Wexner (CEO of LBrands, then named The Limited) to invigorate Abercrombie & Fitch.[13] The company, founded in 1892, had been purchased by Limited Brands in 1988 after bankruptcy.

Jeffries was the main architect of the company's new brand.[2] It was rebuilt as an upscale apparel retailer for the collegiate. He built the brand around "sexualized marketing", which included using shirtless muscular male models to greet patrons in stores, and likewise using scantily-clad male models posing in sexually-suggestive positions in large advertisements and billboards.[14] Jeffries created a cult following among young buyers.[14] By the mid-1990s, Abercrombie & Fitch had opened dozens of new stores globally.[2] "Abercrombie led the pack of teen fashion brands in the 1990s largely as a result of the image created by Mr. Jeffries", according to the Wall Street Journal.[14]

2000s

An outspoken businessman, Jeffries made statements in the press that were controversial.[15] For example, he once said, "We hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don't market to anyone other than that." Jeffries noted that "those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don't alienate anybody, but you don't excite anybody, either."[15]

This controversial "marketing approach that made A&F into a financial success also made it an HR and PR nightmare".[16][14] A&F attracted controversy from different interest groups, such as the feminist movement and the American Decency Association, and a number of lawsuits ensued.[2] In 2003, Black, Latino and Asian American employees filed a class action lawsuit against the company claiming that minority applicants were discouraged from applying.[16] The American Decency Association called for a boycott of A&F.[16] A group of Pennsylvania high schoolers called for a "girlcott" of the brand.[16]

In 2004, Jeffries earned approximately US$25 million with a "stay bonus" of $6 million, which dropped from $12 million after a controversy involving his "excessive compensation".[2] After surveying 2,000 US corporations, the Corporate Library named Jeffries as the "Highest Paid Worst Performer" of 2008, after he received a compensation package valued at $71.8 million.[17] Jeffries refused to lower prices or offer discounts at Abercrombie & Fitch stores during the retail recession of the financial crisis of 2007–2008, until September 2009, after the company posted same store sales losses for 17 consecutive months.[18] Sales recovered in 2011.[19] His total compensation in 2011 was estimated at $46,609,075, most of this being in the form of stock options.[citation needed] As of 2012, Jeffries owned about 2.9% of the company's shares, making him difficult to remove without his consent. At that time, his contract entitled him to a over $100 million should he lose his job due to an ownership change.[20] Jeffries was once one of the best-paid CEOs in retail but his compensation shrank 72 percent in 2013. His total pay was $2.24 million in the fiscal year of 2013, which ended February 1. That was down from $8.16 million in the previous year and $48.1 million before that.[21]

Jeffries' business reputation sank in 2013, when TheStreet's Herb Greenberg named Jeffries the worst CEO of 2013. Greenberg pointed out that the share price for A&F had collapsed by 40% during the year.[22] This was after Jim Cramer of CNBC had earlier named Jeffries to his "Wall of Shame".[23]

On December 9, 2014, Jeffries stepped down as A&F CEO amid mass criticism of the company's performance and 11 consecutive quarters of negative company comparable-store sales. The shares jumped 8 percent after the move was announced, marking the biggest one-day gain in more than nine months.[21][24] On top of his standard pension, Mike Jeffries received lifetime bonus payments totaling about $1m a year. Following allegations of sex trafficking in late 2023, the company stopped making the bonus payments.[25]

In 2022, Jeffries' leadership of A&F was the subject of a Netflix documentary, White Hot: The Rise & Fall of Abercrombie & Fitch, which focused on Jeffries' transformation of A&F into an "avatar of exclusivity and soft-core sex appeal." The film's focus is the buildup to a 2003 class-action lawsuit against the company.[26]

Personal life

In 1971, Jeffries married Susan Hansen,[5] and they have a grown son.[2]

Salon.com reported in 2006 that Jeffries is a "gay man"[27] who lives separately from his wife.[2] As of 2013, Jeffries was reported to be living with his partner, Matthew Smith (born c. 1963),[28][29] and three dogs.[20] Smith was more than a romantic partner, as he also headed the Jeffries Family Office, an Ohio limited liability company that "advocates for the personal interests of Jeffries."[28] At Abercrombie & Fitch, Smith reviewed internal documents and consulted on real estate matters, despite holding no official position in the company or being professionally qualified to handle such matters.[20] Smith's involvement was criticized for being poor corporate governance,[28] and was likely a factor in Jeffries's decision to leave the company in 2014, according to GQ.[19]

Allegations of discriminatory attitudes and behaviors

In a 2006 interview with Salon, Jeffries stated that his clothing line was exclusively for "cool" people. Moreover, he has said he did not want overweight or unattractive people to wear his clothes. Jeffries justified his approach saying "those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don't alienate anybody, but you don't excite anybody, either."[2] The comments, which came to light in 2013, drew negative publicity and criticism for the company.[30] Jeffries issued a public apology on May 15, 2013, stating that "We are completely opposed to any discrimination, bullying, derogatory characterizations or other anti-social behavior based on race, gender, body type or other individual characteristics".[31]

In October 2012, Bloomberg News first reported on Jeffries' standards for his cabin crew on Abercrombie's Gulfstream G-V Jet, used by Jeffries, Smith and their dogs.[32] The male models who work as stewards aboard the company jet were required to wear Abercrombie-branded polos, jeans, boxer briefs and flip-flops as part of their uniform, as well as a "spritz" of cologne. This information then came to light as a result of a lawsuit that claimed Jeffries fired his own jet pilot in order to replace him with a much younger man.[20] The suit was quickly settled out of court when Jeffries was ordered to testify by the presiding judge.[33] Male house staff for Jeffries, paid for by the Jeffries Family Office, were provided by the same modeling firm that supplies male staff for the company jet.[20]

Sex trafficking investigation, lawsuit, and indictment

In 2023, the BBC completed a two-year investigation into several allegations that Jeffries and his cohorts exploited young adult men for sex. The events allegedly occurred in Jeffries's New York residences and at luxury hotels around the world.[29]

In October, a few weeks after the BBC report, Jeffries and others were sued in New York by a former model under a civil class action complaint of sex trafficking.[3][34] The former model alleged that Jeffries and his partner Matthew Smith would look for prospective men on the Internet, provide them with money, drugs and promises of recruitment, and then sexually exploit them, with the explicit understanding their sexual cooperation was the price for the coveted job.[34][3] Per the suit, these practices occurred between at least 1992 to 2014. It alleges that over a hundred young models were possibly victimized. Jeffries, Smith, and the Jeffries Family Office are named in the suit.[3]

On October 22, 2024, Jeffries and Smith were indicted by federal prosecutors in the United States District Court for the Eastern District of New York, on criminal charges of sex trafficking and interstate prostitution. The federal criminal indictment is separate from the civil class-action lawsuit filed in October 2023.[35][36] He was released on $10 million bail with his house as collateral and must wear a GPS collar. He plead not guilty in an October 25 arraignment.[37]

References

  1. ^ Stempel, Jonathan (October 22, 2024). "Former Abercrombie CEO Mike Jeffries charged with sex trafficking". Reuters. Retrieved October 22, 2024. The defendants include Jeffries, 80...
  2. ^ a b c d e f g h i j k Denizet-Lewis, Benoit (January 24, 2006). "The Man Behind Abercrombie & Fitch". Salon.com. Archived from the original on April 20, 2022. Retrieved September 15, 2022.
  3. ^ a b c d D'Innocenzio, Anne (October 27, 2023). "Abercrombie & Fitch slapped with lawsuit alleging sexual abuse of its male models under former CEO". The Associated Press. Retrieved October 28, 2023.
  4. ^ Hill, James; Katersky, Aaron (October 23, 2024). "Former Abercrombie & Fitch CEO charged with sex trafficking over a dozen victims: Prosecutors". ABC News. Retrieved October 23, 2024. Former Abercrombie & Fitch CEO Mike Jeffries and two others were arrested Tuesday as part of a criminal investigation into the alleged sex trafficking of more than a dozen victims, according to the FBI and federal prosecutors.
  5. ^ a b c "Susan Hansen Sets Nuptials". Society. The New York Times. March 14, 1971. Retrieved April 19, 2022.
  6. ^ Earnest, Leslie (October 29, 2002). "A&F Muscling in on Southland Surf Wear Firms". The Los Angeles Times. p. C7. The 57-year-old Jeffries...attended Claremont McKenna College, said company spokesman Tom Lennox.
  7. ^ a b "Apparel Chain Planned, By Ex-Federated Aide". Business People. The New York Times. June 10, 1983. Retrieved October 28, 2023.
  8. ^ Barmash, Isadore (September 1, 1989). "Alcott & Andrews Seeking Protection From Creditors". The New York Times. Retrieved April 19, 2022.
  9. ^ Barmash, Isadore (October 14, 1989). "Alcott & Andrews to Close Its Stores". The New York Times. Retrieved April 19, 2022.
  10. ^ a b Shaer, Matthew (February 9, 2014). "Why Abercrombie Is Losing Its Shirt". The Cut. Retrieved October 28, 2023.
  11. ^ Berfield, Susan; Rupp, Lindsey (January 22, 2015). "The Aging of Abercrombie & Fitch-Behind the Decline of Abercrombie & Fitch and the Fall of its Mastermind, Michael Jeffries". Bloomberg News. Archived from the original on June 14, 2017. Retrieved January 22, 2015.
  12. ^ Laura, Bird (October 7, 1997). "No Detail Escapes the Attention Of Abercrombie & Fitch's Chief". The Wall Street Journal. Retrieved October 28, 2023.
  13. ^ Feller, Madison (April 19, 2022). "Where Is Mike Jeffries, Abercrombie & Fitch's Former CEO, Now?". Elle. Retrieved April 20, 2022.
  14. ^ a b c d Kapner, Suzanne (April 24, 2015). "Abercrombie & Fitch Dials Back The Sex". The Wall Street Journal. Retrieved October 29, 2023.
  15. ^ a b Farfan, Barbara (August 23, 2018). "Quotes from Mike Jeffries, former Abercrombie & Fitch CEO". The Balance—Small Business. Retrieved April 19, 2022. Quotes About His Business Philosophy and Sexualizing a Retail Brand... Protesters speaking out against Jeffries' controversial statements.
  16. ^ a b c d Olson, Emily (October 4, 2023). "Abercrombie & Fitch investigates claims that its ex-CEO exploited men at sex events". NPR. Retrieved January 1, 2023.
  17. ^ Rooney, Ben (September 28, 2009). "Corporate Library 'Highest Paid Worst Performers' 2009". CNN. Retrieved May 12, 2010.
  18. ^ Farfan, Barbara (September 7, 2009). "CEO Mike Jeffries Overvalues His Own Brand and Loses His Cool After Teen Shoppers and Investors Don't Aspire To Abercrombie Any More". Barbara's Retail Industry Blog. Archived from the original on September 12, 2009. Retrieved April 19, 2022 – via About.com.
  19. ^ a b Jannuzzi, John (December 9, 2014). "Abercrombie CEO Mike Jeffries is Out, but How Bad Has it Gotten, Really?". GQ. Retrieved May 21, 2021.
  20. ^ a b c d e Maheshwari, Sapna (October 18, 2012). "Models on Abercrombie Jet Had Rules on Proper Underwear". Bloomberg Businessweek. Archived from the original on June 6, 2013. Retrieved May 9, 2013.
  21. ^ a b Rupp, Lindsey (December 9, 2014). "Abercrombie CEO Leaves Chain After Overseeing Rise and Fall". Bloomberg Business. Archived from the original on February 4, 2017.
  22. ^ Greenberg, Herb (December 19, 2013). "And the Worst CEO of 2013 Is...?". TheStreet.com. Retrieved April 19, 2022.
  23. ^ Brodie, Lee (November 14, 2013). "Top CEO lands on Cramer's Wall of Shame". CNBC.com. Retrieved April 19, 2022.
  24. ^ Kell, John. "Abercrombie's CEO Mike Jeffries steps down". Fortune. Retrieved December 10, 2014.
  25. ^ Croxford, Rianna (November 21, 2023). "Abercrombie & Fitch suspends payments to ex-CEO after sex-trafficking claims". BBC. Retrieved January 12, 2024.
  26. ^ O'Sullivan, Michael (April 23, 2022). "What to stream: 'White Hot: The Rise and Fall of Abercrombie & Fitch'". The Washington Post. Retrieved November 18, 2022.
  27. ^ Lowder, J. Bryan (December 11, 2014). "An Ode to Abercrombie". Salon.com. Retrieved September 16, 2022.
  28. ^ a b c Maheshwari, Sapna (May 22, 2013). "Abercrombie Execs Troubled By Involvement Of CEO's Partner". BuzzFeed News (BuzzFeed.com). Retrieved April 19, 2022.
  29. ^ a b Croxford, Rianna (October 2, 2023). "Abercrombie & Fitch ex-CEO accused of exploiting men for sex". BBC Panorama. Retrieved October 2, 2023.
  30. ^ Lutz, Ashley (May 3, 2013). "Abercrombie & Fitch Refuses To Make Clothes For Large Women". Business Insider.
  31. ^ Sozzi, Brian (December 9, 2014). "3 Huge Reasons Abercrombie CEO Mike Jeffries Lost His Job". TheStreet. Retrieved January 16, 2020.
  32. ^ Chittum, Ryan (October 19, 2012). "A CEO's High-Flying Standards". Columbia Journalism Review.
  33. ^ Maheshwari, Sapna (November 21, 2012). "Abercrombie Settles Pilot Lawsuit After CEO Ordered to Testify". Bloomberg Business. Retrieved October 2, 2015.
  34. ^ a b "Bradberry et al. versus Abercrombie & Fitch Co., Michael S. Jeffries, Matthew Smith, and The Jeffries Family Office, LLC" (PDF). United States District Court for the Southern District of New York. October 27, 2023. Retrieved October 28, 2023.
  35. ^ Kaye, Danielle (October 22, 2024). "Former Abercrombie C.E.O. Is Charged With Running Sex-Trafficking Ring". The New York Times. Retrieved October 23, 2024.
  36. ^ "Former CEO of Abercrombie & Fitch indicted on sex trafficking charges". cnn.com. CNN. October 22, 2024. Retrieved October 23, 2024.
  37. ^ Stempel, Jonathan (October 25, 2024). "Former Abercrombie CEO Jeffries pleads not guilty to sex trafficking". Reuters. Retrieved October 26, 2024.
External image
image icon Photo used in Salon.com interview
Retrieved from "https://en.wikipedia.org/w/index.php?title=Mike_Jeffries_(businessman)&oldid=1254550175"