This document summarizes a presentation about Abercrombie & Fitch's business practices and financial performance. It discusses controversies over the brand's exclusionary hiring and marketing practices as described by former CEO Mike Jeffries. It also analyzes the brand's declining financial results and underperforming stock price in recent years. Finally, it considers recommendations for improving the brand's social impact and business strategy, including increasing diversity, aligning CSR with its market strategy, or overhauling its vision under new leadership without CEO Mike Jeffries.

1. Business Goverment and Society
Final Presentation
Group G:
Juan Pablo David, Caleb Nathaniel Hall Forbes, Belinda Furrer,
Nikita Rogozin, Christian Sayn-Wittgenstein, Dae Sop Shin

2. Question 1
Do you or did you ever buy Abercrombie and
Fitch brands (including Hollister, Gilly Hicks,
abercrombie kids)?
a) Yes
b) No

3. Question 2
How do you perceive A&F as a brand:
a) Positive
b) Neutral
c) Negative

4. Mike Jeffries, CEO

6. That’s why 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...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." - Abercrombie & Fitch CEO Mike Jeffries
(via Business Insider)

7. Financial Performance
FINANCIAL SUMMARY
The following summarized financial and statistical data compares Fiscal 2012, Fiscal 2011 and Fiscal 2010:
2012 2011 2010
Net sales by segment (in thousands) $ 4,510,805 $ 4,158,058 $ 3,468,777
U.S. Stores $ 2,615,138 $ 2,710,842 $ 2,546,798
International Stores $ 1,195,016 $ 894,616 $ 517,005
Direct-to-consumer $ 700,651 $ 552,600 $ 404,974
Net sales as a % of total sales
U.S. Stores 58 % 65 % 73 %
Table of Contents
ABERCROMBIE & FITCH CO.
FINANCIAL SUMMARY
(Thousands, except per share and per square foot amounts, ratios and store and associate data)
(Information below excludes amounts related to discontinued operations, except where otherwise noted)
2012 (1)
Restated 2011 (2)
Restated 2010 (2)
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
(3) — $ 796 $ — $ (78,699) $ (35,914)
Net Income
(3)
$ 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
(3)
Basic $ — $ 0.01 $ — $ (0.90) $ (0.41)
Diluted $ — $ 0.01 $ — $ (0.89) $ (0.40)
Net Income Per Share
(3)
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

9. Shareholders

10. Shareholder Value?
-
50.00
100.00
150.00
200.00
250.00
Abercrombie & Fitch Co. S&P 500 S&P Retail Apparel Sector

12. Employees

14. Employment Scandals
Hiring Good
Looking store staff
“models”
Firing because of
Age
Making personnel
BUY A&F clothes to
wear in store
Asking male model
to masturbate for
photorshoot
Refusing to hire
minorities
Jeffries apologized,
but…..

15. Customers

23. Activists

24. A destructive narrative
High school kids don’t need any narrative to help them segregate
themselves
– Yet A&F gives them one…
“As silly as it seems, it made me feel worthless to not be able to wear
the "it" styling that everyone else was wearing.”
- Benjamin O’Keefe, Change.org Petition Organizer

29. Sports competitions
“Anti-bullying”
scholarship
Reduce GHG emissions
by 8% before 2018
$9.5M raised in 10
years, through local
donations to Ohio
hospitals

30. Equality?
Equality?

32. Recommendations

33. Question 3
How do you NOW perceive A&F as a brand:
a) Positive
b) Neutral
c) Negative

34. Main issues:
1) Underperformance of shares
2) Discrimination of employees
3) Discrimination of customers
4) Negative social footprint
5) Lack of reasonable CSR
6) Highly questionable CEO

35. Alternative 1:
Increasing customer
base (no change in
overall positioning)
• New sizes
• New products
• New markets

36. Alternative 2:
Align CSR with market strategy:
• Challenges
• Anti bullying campaign
• Strategic philantropy

37. Alternative 3:
Change A&F’s vision
and positioning:
• Aspirational
• Inclusion
• New culture
Preferred scenario
but…

38. … CEO Mike Jeffries
needs to leave!

39. Questions & Answers