Please answer the following questions:
1. Evaluate Abercrombie & Fitch’s response (see pdf attached). What could the company have done better? (Hint: External research should be conducted to understand general advices on how companies should handle PR crisis like this. Then give Abercrombie & Fitch your suggestions on what it should have done. Be in context.)
2. Should Abercrombie & Fitch add plus-sized clothing? Why? (Hint: External research should be conducted to understand plus-size apparel market. Then make your recommendation that fits Abercrombie & Fitch.)
Note: This case is a real public relations crisis A&F experienced. When you make recommendations on what changes A&F should make, they are your recommendations, which may be the same as what A&F decided back then or different. Either is fine, as long as your recommendations are logical, reasonable, context-specific, and supported well by your argument/evidence.
2 pages
Please make sure it:
provides thorough and convincing support for the main idea
Able to suggest and bring out an appropriate solution to the case
At least 3-5 external research materials are used
W13420
ABERCROMBIE & #FITCHTHEHOMELESS
Karen Robson, Colin Campbell and Justin Cohen wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright © 2013, Richard Ivey School of Business Foundation Version: 2013-10-03
“In every school there are the cool and popular kids, and then there are the not-so-cool kids;
candidly, we go after the cool kids. We go after the attractive all-American kid with a great
attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong.
Are we exclusionary? Absolutely.”1
Abercrombie & Fitch CEO Mike Jeffries, 2006
In May 2013, nearly three weeks had passed since a quote made by Abercrombie & Fitch CEO Mike
Jeffries in 2006 — that some people simply didn’t belong in his company’s clothes — had resurfaced,
and the backlash against the company showed no signs of waning. Increased social media usage and the
proliferation of user-generated content had amplified the situation, and the #FitchTheHomeless campaign
had gone viral. Celebrities who normally represented brands took on a campaign of dis-endorsement of
the Abercrombie & Fitch label.
In the face of this crisis, a team of Abercrombie & Fitch executives — excluding Jeffries — was set to
meet with the president and CEO of the National Eating Disorder Association and members of America
the Beautiful Teen Empowerment Series to discuss the situation. Moving forward, Abercrombie & Fitch
had some decisions to make about how to appease angry consumers and restore its brand image.2
BACKGROUND
Abercrombie & Fitch
David T. Abercrombie and Ezra H. Fitch created Abercrombie & Fitch in New York City in 1892 to serve
the needs of wealthy outdoor sportsmen and hunters.3 The company existed for nearly 80 years before
1 www.salon.com/2006/01/24/jeffries/, accessed August 23, 2013.
2 www.washingtonpost.com/blogs/on-leadership/wp/2013/05/22/abercrombie-fitchs-big-bad-brand-mistake/, accessed
August 23, 2013.
3 www.nytimes.com/2004/07/13/business/abercrombie-fitch-may-be-cool-but-cool-only-goes-so-far.html?Pagewanted
=all&src=pm, accessed August 23, 2013.
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going bankrupt in the late 1970s.4 The brand was then acquired by a Texas-based sporting goods
company and reborn as a mainly mail-order specialty retailer. In 1988, the Ohio-based clothing company,
The Limited, purchased the brand for $47 million.5
By 1992, Abercrombie & Fitch had evolved from supplying safari clothes and supplies to the U.S. elite at
the end of the nineteenth century to pleasing twenty-first-century teens with a particular “All-American”
style of clothing.6 Jeffries, hired to lead the business in 1992, could take credit for this transformation —
the development and success of the Abercrombie & Fitch label was the result of his vision for the
company. When he assumed the role of CEO, Abercrombie & Fitch operated only 36 stores with annual
revenue of roughly $50 million; by 2013, under his leadership, the company had grown to operate more
than 1,000 stores with annual revenue exceeding $4.5 billion.7 Jeffries had overseen the launch of flagship
stores in high value markets in Europe and Asia; he also developed complementary brands to reach other
youth segments. The Abercrombie & Fitch brand had an undeniable global reach.
REPEATED LAWSUITS TELL A DIFFERENT STORY
Controversy was not uncommon at Abercrombie & Fitch. Typically, controversies fell into two
categories: lawsuits regarding improper hiring and dismissal practices and lawsuits from consumer groups
who believed that Abercrombie & Fitch had offensive product lines.
Numerous former employees had made accusations of racial and religious prejudice. Abercrombie &
Fitch responded to the accusations by claiming to have hired an above industry average number of
minorities and denied having improper hiring or management practices. Yet, accusations ranged from
claims of wrongful dismissal for wearing a head scarf8 to job applicants who claimed they were told that
they could not have a position due to quotas of their particular ethnicity already being filled.9 In 2004,
Abercrombie & Fitch paid $40 million to settle a class action lawsuit in which minority employees
claimed that they were forced to work in the storeroom rather than on the shop floor so that they would
not be seen by customers. Although Jeffries denied wrongdoing, some alleged that these issues were the
result of systemic dysfunction linked to strict style guides that specified the classic “All-American” look
that Jeffries prescribed.
A lawsuit filed by a former company pilot highlighted Jeffries’s bizarre attention for detail. Cabin staff on
the company’s jet were required to adhere to a strict uniform and style guide and were instructed exactly
how reading materials should be prepared, what snacks were to be served and even how beds were to be
made and carpets vacuumed. In addition, there were specific instructions as to where Jeffries’s beloved
dogs were to sit.10 Jeffries’s vigilance and precise requests carried over to his vision for his brand
ambassadors, the people who wore his clothes, and his employees, whom he viewed as in-store models.
The numerous controversies and lawsuits that Abercrombie & Fitch had faced had result in financial
settlements and legal fees, but they had not resonated strongly with its target market. Indeed, these
4 www.fundinguniverse.com/company-histories/abercrombie-fitch-co-history/, accessed August 23, 2013.
5 www.nytimes.com/2004/07/13/business/abercrombie-fitch-may-be-cool-but-cool-only-goes-so-far.html?pagewanted
=all&src=pm, accessed August 23, 2013.
6 Ibid.
7 www.businessinsider.com/abercrombie-ceo-at-a-crossroads-2013-8#ixzz2bia9UFuF, accessed August 23, 2013.
8 http://jezebel.com/5479980/american-beauty-a-brief-history-of-abercrombies-hiring-practices, accessed August 23, 2013.
9 www.cbsnews.com/8301-18560_162-657604.html, accessed August 23, 2013.
10 www.nytimes.com/2012/10/20/business/suit-exposes-strict-manual-for-abercrombie-flight-crew.html?_r=0, accessed
August 23, 2013.
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Page 3 9B13A032
controversies had little impact on brand equity, and many branding pundits had been quick to compliment
Jeffries for his focus on and vision of his brand’s personality.11
SOCIAL MEDIA: NOT A “GOOD LOOK” FOR ABERCROMBIE & FITCH
On May 3, 2013, Business Insider posted an article mentioning that while Abercrombie & Fitch
manufactured XL and XXL sizes for men, the company refused to manufacture clothes for plus size
women. The article made reference to a 2006 interview with Jeffries in which the CEO covered a number
of controversial topics about the company’s perceived brand direction, image and strategy.12 In this 2006
Salon.com interview (a quote from which prefaces this case), Jeffries stated that the company featured
certain types of people “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.”
The response from consumers and the general public was swift. By May 9, his remarks had sparked
outrage across the Internet. Social news and entertainment website Reddit posted multiple consumer
responses to these resurfaced quotes.13 The commentary on Reddit was aggressive and insulting towards
Jeffries, with numerous postings of photos mocking his appearance and ironically suggesting that he was
not attractive enough to wear the brand himself. For instance, an unflattering picture depicting the CEO
wearing an Abercrombie & Fitch garment was overlaid with the phrase: “If the CEO of Abercrombie and
Fitch only wants attractive people wearing his brand . . . then he’s going to have to go ahead and take off
that sweater.” Another less kind version stated: “Wants only attractive people to shop in his stores. Looks
hideous.” Similar photo creations poked fun at his looks by comparing him to Old Bif Tannen, a movie
character who did not age well, and Rocky Dennis, a boy disfigured due to a rare genetic bone disorder.14
Abercrombie & Fitch did not respond.
Following the Reddit posts, an open letter entitled “Sizing Up Abercrombie — A Letter to Mike Jeffries”
from Andrea Neuser, a mother of three, was published on The Huffington Post website. In her letter,
Neuser wrote:
Your customer is an “attractive, all-American kid with a great attitude and lots of friends.” I am a
mom of three daughters, ages 17, 13, and 10. They are all thin, attractive, all-American kids with
great attitudes and lots of friends. They shop at Abercrombie. I believe they are your target
audience . . . . Please find the enclosed clothing, purchased at our local
Abercrombie/Abercrombie and Fitch stores. My thin, popular, cool kids will not need them
anymore.15
On the same day, Change.org released a petition entitled “Abercrombie & Fitch CEO Mike Jeffries: Stop
telling teens they aren’t beautiful; make clothes for teens of all sizes!”16 Major news organizations began
to take notice.17
11 www.stealingshare.com/blog/index.php/the-temporary-slide-of-abercrombie-fitch/, accessed August 23, 2013.
12 www.businessinsider.com/abercrombie-wants-thin-customers-2013-5, accessed August 23, 2013.
13 http://knowyourmeme.com/memes/events/abercrombie-anti-plus-size-controversy, accessed August 23, 2013.
14 www.uproxx.com/webculture/2013/05/abercrombie-and-fitch-ceo-mike-jeffries-vs-the-internet/, accessed August 23, 2013.
15 www.huffingtonpost.com/andrea-neusner/abercrombie-sizes-mike-jeffries_b_3247213.html, accessed August 23, 2013.
16 www.change.org/petitions/abercrombie-fitch-ceo-mike-jeffries-stop-telling-teens-they-aren-t-beautiful-make-clothes-for-
teens-of-all-sizes, accessed August 23, 2013.
17 http://abcnews.go.com/blogs/entertainment/2013/05/small-sizes-an-overweight-distraction-for-abercrombie-fitch/,
accessed August 23, 2013.
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By May 13, 2013, there was still no response from Abercrombie & Fitch, and the momentum against the
brand was still gaining. Greg Karber, James DeLorean and Daniel Lisi released a video entitled
#FitchTheHomeless on YouTube.18 Karber conceived of the video as a means to protest Abercrombie &
Fitch’s refusal to make plus size women’s clothing, determination to market to attractive people and
alleged practice of burning damaged clothing rather than donating it to shelters. The video featured
Karber searching for Abercrombie & Fitch clothes at a thrift shop, ridiculing the brand and its customer
base, and then trying, in some cases with difficulty, to give Abercrombie & Fitch clothes away to the
homeless. The message and purpose of the video were clear: Abercrombie & Fitch needed a brand image
readjustment.
The video was an immediate hit, accumulating 4.3 million views in its first three days.19 In addition,
mainstream media picked up the #FitchTheHomeless campaign; a morning show, “The Talk,” featured a
panel of women reflecting ethnic, racial, physical and age diversity, who debated the Abercrombie &
Fitch controversy. Prominent African American comedian and actress Aisha Tyler pointed out the
prejudice that exists in the United States against weight:
Weightism is the last bastion of discrimination in America. . . It is the last group of people that it
is OK to discriminate against. . . Imagine if he said we don’t want gay people to wear our clothes
or we don’t want black people to wear our clothes. We made our jeans so they don’t fit big
booties so black girls won’t wear them.20
The next day, actress Kirstie Alley, known for her engagement with the media and entertainment industry
about her weight struggles, commented on “Entertainment Tonight”:
This dude from Abercrombie & Fitch — he’s the CEO — what a [expletive]! . . . He says . . .
Abercrombie clothes are for people that are cool and who look a certain way and are beautiful
and who are thin and blah, blah, blah. He goes on and on and on. That would make me never buy
anything from Abercrombie even if I was cool and thin. I got two kids in that age bracket that will
never walk in those doors because of his view of people.21
THE ABERCROMBIE & FITCH RESPONSE
The brand finally addressed the controversy on May 15. In a Facebook post, Jeffries stated:
I want to address some of my comments that have been circulating from a 2006 interview. While
I believe this seven-year-old resurrected quote has been taken out of context, I sincerely regret
that my choice of words was interpreted in a manner that has caused offense. A&F is an
aspirational brand that, like most specialty apparel brands, targets its marketing at a particular
segment of customers. However, we care about the broader communities in which we operate and
are strongly committed to diversity and inclusion. We hire good people who share these values.
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.22
18 www.youtube.com/watch?v=O95DBxnXiSo, accessed August 23, 2013.
19 http://tech.fortune.cnn.com/2013/05/16/harsh-anti-abercrombie-video-goes-viral/, accessed August 23, 2013.
20 www.youtube.com/watch?v=YmWmhzTQLLQ, accessed August 23, 2013.
21 www.etonline.com/news/134051_Kirstie_Alley_Blasts_Abercrombie_and_Fitch_CEO_Mike_Jeffries/index.html, accessed
August 23, 2013; www.youtube.com/watch?v=ZkMLkOk2j3I, accessed August 23, 2013.
22 www.facebook.com/abercrombie/posts/10151345201895378, accessed August 23, 2013.
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The response from Jeffries did little to assuage consumers or the media. Two days later, comedians Ellen
DeGeneres and Jimmy Kimmel both addressed the controversy on their shows. DeGeneres’s approach
involved absorbing the Abercrombie & Fitch controversy into the larger issue of female body image. She
reached out to her global audience by saying: “There is a size zero, which I don’t understand. Zero is
nothing. Now they have a double zero. There’s a double zero! What are we aspiring to? ‘Honey, do these
jeans make my butt look invisible?’ — Beauty isn’t between a size zero and a size eight. It is not a
number at all. It is not physical.”23
Kimmel released a spoof video with a strong, yet comedic, message. Mimicking the #FitchTheHomeless
video and starring actor Jim O’Heir, the video depicts the plus-sized actor purchasing multiple
Abercrombie & Fitch shirts and stapling them together to make a shirt that would fit him.24
Angered by Abercrombie & Fitch’s refusal to cater to plus size women, on May 19 the self-described
“fat” blogger Jes “The Militant Baker” recreated print ads for the brand that featured herself and a hired
male model with the tagline “Attractive & Fat.” Both were topless in the spoof ads, which also mimicked
the black-and-white style common to Abercrombie & Fitch.25 In an open letter to Jeffries, she explained
her motivation in making the video:
I’m sure you didn’t intend for this to be the outcome, but in many ways you’re kind of brilliant.
Not only are you a marketing genius (brand exclusivity really is a profitable move), but you also
accidentally created an opportunity to challenge our current social construct. My hope is that the
combination of these contrasting bodies will someday be as ubiquitous as the socially accepted
ideal.26
Her response was emotive enough that she was later invited to speak about this issue on the “Today”
show on NBC and was interviewed by CNN. She also challenged Jeffries to pose shirtless with a “fat
chick.”
ABERCROMBIE & FITCH: THE NEXT SEASON
Despite the humour injected by entertainers during their discussion of this controversy, this episode was
no laughing matter for Abercrombie & Fitch. Sales at their stores plummeted due to the negative publicity
and backlash.27 The Forbes BrandIndex impression scores showed that Abercrombie & Fitch closed at an
annual low, almost 40 points below its previous low that year (see Exhibit 1).28
Almost three weeks after #FitchTheHomeless was released on YouTube, a team of executives and
Abercrombie & Fitch critics gathered at company headquarters to discuss the crisis. Jeffries was
noticeably absent from these meetings. At their conclusion, Abercrombie & Fitch released the following
statement:
We look forward to continuing this dialogue and taking concrete steps to demonstrate our
commitment to anti-bullying in addition to our ongoing support of diversity and inclusion. We
23 www.youtube.com/watch?feature=player_embedded&v=5VRJRy9rnfE, accessed August 23, 2013.
24 https://www.youtube.com/watch?v=DZxw1vydvwI, accessed August 23, 2013.
25 www.themilitantbaker.com/2013/05/to-mike-jeffries-co-abercrombie-fitch.html, accessed August 23, 2013.
26 Ibid.
27 www.huffingtonpost.com/2013/05/24/abercrombie-sales-ceo-controversy_n_3332601.html, accessed August 23, 2013.
28 www.forbes.com/sites/brandindex/2013/06/06/abercrombie-impression-with-young-adults-continues-to-fall-following-cool-
kid-comments/, accessed August 23, 2013.
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want to reiterate that we sincerely regret and apologize for any offense caused by comments we
have made in the past which are contrary to these values.29
Moving forward, Abercrombie & Fitch had a lot of decisions to make. What was the best way to
demonstrate commitment to anti-bullying, to support inclusion and to hold true to their latest apology?
How could the company restore its brand image without diluting its “All-American” heritage? Had
Abercrombie & Fitch become a poster child for hatred towards unattainable beauty? Should they sell
larger sized clothing? What would the “next season” bring?
29 www.huffingtonpost.com/2013/05/23/abercrombie-and-fitch-apology_n_3323668.html, accessed August 23, 2013.
Karen Robson is a PhD candidate at Segal Graduate School of Business, Simon Fraser University. Colin Campbell is
an assistant professor in the Department of Marketing and Entrepreneurship at Kent State University. Justin Cohen is
a research fellow at Ehrenberg-Bass Institute for Marketing Science, School of Marketing, University of South
Australia.
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EXHIBIT 1: FINANCIAL INFORMATION FOR ABERCROMBIE & FITCH (‘000)
2012 2011 2010 2009 2008
Net Sales $4,510,805 $4,158,058 $3,468,777 $2,928,626 $3,484,058
Gross Profit $2,816,709 $2,550,224 $2,217,429 $1,883,598 $2,331,095
Operating Income $374,233 $221,384 $237,180 $117,912 $498,262
Net Income from Continuing Operations $237,011 $143,138 $155,709 $78,953 $308,169
Income (Loss) from Discontinued Operations, Net of
Tax – $796 – ($78,699) ($35,914)
Net Income $237,011 $143,934 $155,709 $254 $272,255
Dividends Declared Per Share $0.70 $0.70 $0.70 $0.70 $0.70
Net Income Per Share from Continuing Operations
Basic $2.89 $1.65 $1.77 $0.90 $3.55
Diluted $2.85 $1.60 $1.73 $0.89 $3.45
Net Income (Loss) Per Share from Discontinued
Operations
Basic – $0.01 – ($0.90) ($0.41)
Diluted – $0.01 – ($0.89) ($0.40)
Net Income Per Share
Basic $2.89 $1.66 $1.77 $0.00 $3.14
Diluted $2.85 $1.61 $1.73 $0.00 $3.05
Basic Weighted-Average Shares Outstanding $81,940 $86,848 $88,061 $87,874 $86,816
Diluted Weighted-Average Shares Outstanding $83,175 $89,537 $89,851 $88,609 $89,291
Other Financial Information
Total Assets (including discontinued operations) $2,987,401 $3,117,032 $2,994,022 $2,821,866 $2,848,181
Working Capital $617,023 $858,248 $927,024 $776,311 $622,213
Current Ratio $1.89 $2.23 $2.68 $2.73 $2.38
Net Cash Provided by Operating Activities $684,171 $365,219 $391,789 $395,487 $491,031
Capital Expenditures $339,862 $318,598 $160,935 $175,472 $367,602
Free Cash Flow $344,309 $46,621 $230,854 $220,015 $123,429
Borrowings – – $43,805 $50,927 $100,000
Leasehold Financing Obligations $63,942 $57,851 $24,761 $20,286 $5,881
Stockholders’ Equity (including discontinued
operations) $1,818,268 $1,931,335 $1,943,391 $182,797 $1,845,578
Return on Average Stockholders’ Equity 13% 7% 8% 0% 16%
Comparable Sales -1% 5% 7% -23% -13%
Net Store Sales Per Average Gross Square Foot $485 $463 $390 $339 $432
Stores at End of Year and Average Associates
Total Number of Stores Open 1,051 1,045 1,069 1,096 1,097
Gross Square Feet 7,958 7,778 7,756 7,848 7,760
Average Number of Associates 95,800 91,000 83,000 83,000 96,200
Source: Abercrombie & Fitch Annual Report 2012.
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