Millennials: You’ll bear in mind strolling into Abercrombie & Fitch within the late ‘90s and early 2000s. Loud, thumping music, fragrance so sturdy you could possibly barely assume straight, and posters of half-naked males have been all a part of the expertise—and a need to really feel “cool.”
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Mike Jeffries, Abercrombie’s former CEO, was behind that imaginative and prescient. And on Tuesday, he and his accomplice Matthew Smith have been arrested in Florida in reference to intercourse trafficking-related prices, in accordance with a federal indictment. The duo, together with an worker of theirs, James Jacobson, allegedly ran a global intercourse trafficking and prostitution ring from 2008 to 2015 that allegedly concerned paying for secret intercourse with probably dozens of males, together with 15 unnamed victims.
The official indictment has been a very long time coming. Final 12 months, BBC launched a documentary about Jeffries’ shady practices. The BBC investigation revealed that Jeffries and Smith allegedly used a intermediary to search out males to attend and take part within the intercourse occasions. Jeffries and Smith would allegedly have interaction in sexual exercise with about 4 males at these occasions or “direct” them to have intercourse with each other, a number of attendees from the occasions informed BBC. Jeffries’ private workers wearing Abercrombie uniforms and supervised the exercise, in accordance with the allegations, and workers members gave attendees envelopes crammed with 1000’s of {dollars} in money on the finish of the occasions.
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The intermediary “made it clear that unless I let him perform oral sex on me, I would not be meeting with Abercrombie & Fitch or Mike Jeffries,” David Bradberry, who was launched to Jacobson in 2010 when he was 23 years outdated, informed BBC. An agent posing as a mannequin recruiter launched Bradberry to Jacobson, who described himself because the gatekeeper to the “owners” of Abercrombie and Fitch, in accordance with the BBC investigation.
The federal indictment included associated allegations and extra.
Jeffries’ shady previous with Abercrombie
In accordance with a 2006 interview with Salon, Jeffries needed to make the 130-year-old retailer into the hearthrob teen clothes model of the time, which he efficiently did—however not with out offending swaths of individuals. His interview just about sums up his advertising method as solely making it about “cool” folks.
“Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla,” Jeffries informed Salon. “You don’t alienate anybody, but you don’t excite anybody, either.”
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By 2006, Abercrombie & Fitch’s earnings had risen for 52 straight quarters, with annual earnings of greater than $2 billion. Plus, the corporate had opened tons of of recent brick-and-mortar shops and launched three new labels, together with Hollister.
“But the marketing approach that made A&F into a financial success also made it an HR and PR nightmare,” in accordance with NPR. Abercrombie’s method to advertising ignited a response from girls by way of mock adverts and a boycott name from the American Decency Affiliation. Black, Latino, and Asian American workers in 2004 filed a class-action lawsuit in opposition to the corporate alleging minority candidates have been discouraged from making use of.
Within the early 2010s, Abercrombie began going south financially on account of age discrimination and hiring apply lawsuits, and Jeffries’ 2006 interview with Salon began being circulated once more and went viral. In 2013, Jeffries was named because the worst CEO of the 12 months by TheStreet’s Herb Greenberg. As well, CNBC’s Jim Cramer named him to his “Wall of Shame.”
“Since its early trading in 1996, Abercrombie has barely beaten the S&P 500. It has dramatically trailed the index over the past one-, three- and five-year marks,” Greenberg wrote in 2013. “The past year, in particular, has been an abomination, leading activist firm Engaged Capital to demand his ouster.”
By 2014, same-store gross sales slumped for 11 straight quarters and two of its subsidiary manufacturers, Ruehl No.925 and Gilly Hicks, shut down only a few years after launch. Teenagers have been simply additionally over Abercrombie’s fashion at that time, and the shopping center period was coming to an in depth. And in 2016, Abercrombie was deemed the most-hated retailer by the American Buyer Satisfaction Index for its hypersexualized advertising and controversies.
Abercrombie’s second wind
However as Abercrombie has distanced itself from Jeffries, the model is making a serious comeback after posting its greatest first-quarter earnings in firm historical past this 12 months. Abercrombie reported $1 billion in web gross sales, a 22% improve from 2023. Final 12 months, its annual revenues have been $5 billion.
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This was an epic comeback for the model. CEO Fran Horowitz took the helm in 2017, revamping shops and inventories in addition to increasing sizes and introducing clothes for quite a lot of existence.
“We moved from a place of fitting in to creating a place of belonging,” Horowitz mentioned in a 2022 speech on the Fordham College Gabelli Faculty of Enterprise’ fifth annual American Innovation Convention.
