American retailer Abercrombie & Fitch Co. (A&F) gained after investor Engaged Capital LLC urged the teen clothing company to start its search for a new chief executive officer and consider selling the company. According to a report by Bloomberg, A&F's shares rose by 5.8% to USD35.99 at the close in New York after the activist investor wrote a letter addressed to the company's board.
Engaged Capital chief investment officer Glenn Welling said in the letter that it is time for a new leadership at A&F. He said that A&F chief executive officer Michael Jeffries is a major stumbling block to the potential sale of the company to private equity, the report stated.
Engaged Capital owns about 400,000 shares in A&F. This accounts for less than 1% of shares outstanding in the teen apparel retailer, Bloomberg said.
A&F has lately been struggling to reconnect with its teenage customers who have become less enamored of its fashions. A&F's full-year earnings as projected to be as much as USD1.50 a share on an adjusted basis, excluding charges. This is below the USD1.97 per share estimate of industry analysts, the report said.
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