Form 8-K ABERCROMBIE & FITCH CO For: Dec 16

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 16, 2015

 

 

Abercrombie & Fitch Co.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware		001-12107		31-1469076
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

6301 Fitch Path, New Albany, Ohio		43054
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (614) 283-6500

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Promotion of Fran Horowitz

On December 16, 2015, Abercrombie & Fitch Co. (the “Registrant”) provided a letter (the “Horowitz Promotion Letter”) to Fran Horowitz, who was then serving as President of the Registrant’s Hollister brand, notifying her that she had been promoted to the newly-created position of President & Chief Merchandising Officer for all brands of the Registrant and outlining the terms of her new compensation arrangements. Ms. Horowitz’s promotion is effective December 21, 2015. In her new position, Ms. Horowitz has responsibility for all customer-facing activities for all of the Registrant’s brands and reports to Arthur C. Martinez, Executive Chairman of the Board of the Registrant. At the appropriate time, the Registrant expects to name new presidents for each of its brands, who will report to Ms. Horowitz.

Biographical and other information concerning Ms. Horowitz, required by Items 401(b), 401(d), 401(e) and 404(a) of Regulation S-K, is set forth in (a) the Registrant’s most recent definitive Proxy Statement, dated May 14, 2015, for the Annual Meeting of Stockholders held on June 18, 2015, and (b) under the caption “EXECUTIVE OFFICERS OF THE REGISTRANT” at the end of “ITEM 1. BUSINESS” in Part I of the Registrant’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015, filed with the Securities and Exchange Commission on March 30, 2015. Such information is incorporated herein by reference.

The Horowitz Promotion Letter outlines the changes to Ms. Horowitz’s base salary as well as her target and maximum annual cash incentive opportunities under the Registrant’s Incentive Compensation Performance Plan (the “Incentive Plan”) as a result of her promotion. The change in Ms. Horowitz’s base salary is effective December 21, 2015, and the new target and maximum annual cash incentive opportunities will be effective for the Company’s fiscal year ending January 28, 2017 (“Fiscal 2016”). The following table shows Ms. Horowitz’s new base salary as well as her new target and maximum annual cash incentive opportunities, each expressed as a percentage of her base salary, under the Incentive Plan. As with other participants in the Incentive Plan, Ms. Horowitz’s maximum annual cash incentive opportunity is two times the target annual cash incentive opportunity.

Ms. Horowitz’s Compensation Changes

 

		Annual Cash Incentive Opportunities (Effective for Fiscal 2016)
Base Salary (Effective December 21, 2015)		Target (as a percent of Base Salary)		Maximum (as a percent of Base Salary)
$1,100,000		135%		270%

 

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In addition, the aggregate grant date fair value of the long-term incentives (in the form of equity awards) to be granted to Ms. Horowitz as part of the annual grant in Fiscal 2016 will be approximately $3,500,000. The specific terms of Ms. Horowitz’s Fiscal 2016 equity awards and the associated performance criteria will be determined in connection with the Compensation Committee’s approval of annual equity awards, typically in late March.

On December 22, 2015, the Registrant issued a news release (the “December 22, 2015 News Release”) announcing the promotion of Ms. Horowitz. A copy of the December 22, 2015 News Release is included as Exhibit 99.1 to this Current Report on Form 8 K and incorporated herein by reference.

Termination of Employment of Christos E. Angelides

On December 18, 2015, the employment of Christos E. Angelides, who had served as President of the Registrant’s Abercrombie & Fitch brand, was terminated, with such termination to be effective on December 21, 2015. Under the terms of the agreement entered into by Abercrombie & Fitch Management Co. (“A&F Management”), a subsidiary of the Registrant (collectively, A&F Management and the Registrant are referred to as the “Company”), and Mr. Angelides, fully executed on July 7, 2015 (the “Angelides Agreement”), the termination of Mr. Angelides’ employment is to be treated as a termination by the Company without cause.

Pursuant to the terms of the Angelides Agreement, the Company will pay Mr. Angelides all accrued but unpaid compensation earned by him through the effective date of the termination of his employment (the “Termination Date”). In addition, if Mr. Angelides executes a release of claims acceptable to the Company:

 

•

The Company will continue to pay Mr. Angelides’ base salary in bi-weekly installments for 18 months following the Termination Date, with such payments to aggregate $1,492,500;

 

•

The Company will pay Mr. Angelides a pro-rated portion of his annual cash incentive opportunity under the Incentive Plan based on actual performance during the Company’s fiscal year ending January 30, 2016 (“Fiscal 2015”) and the number of days in Fiscal 2015 that elapse prior to the Termination Date;

 

•

The Company will reimburse Mr. Angelides during the 18 months following the Termination Date for 100% of the monthly premium costs of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), subject to Mr. Angelides’ election of such coverage and the additional eligibility requirements set forth in the Angelides Agreement.

 

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The Company will pay Mr. Angelides an additional cash amount of $4,000,000 related to the forfeiture of his “Equity Replacement Grant” to which he is entitled under the offer letter accepted by Mr. Angelides on June 10, 2014 (the “Angelides Offer Letter”), which amount represents payment for the 50% of the portion of Equity Replacement Grant that would have vested after year 1 of Mr. Angelides’ employment with the Company.

 

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The outstanding equity awards held by Mr. Angelides will vest (if at all) in accordance with the terms of the applicable award agreements and the Angelides Agreement. Vested equity awards will not be forfeited.

The Angelides Agreement imposes various restrictive covenants on Mr. Angelides including non-competition, non-solicitation, non-disparagement and confidentiality covenants, which remain in effect in accordance with their terms. The non-competition covenant prohibits Mr. Angelides from engaging in certain activities with identified competitors of the Company for a period of 12 months after the termination of his employment. The non-solicitation covenant prohibits Mr. Angelides from engaging in certain solicitation activities for a period of 24 months after the termination of his employment.

The foregoing summary of the provisions of the Angelides Agreement and the Angelides Offer Letter applicable to the termination of Mr. Angelides’ employment without cause is qualified in its entirety by reference to the complete text of: (i) the Angelides Agreement, which is incorporated herein by reference and a copy of the form of which was included as Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on July 9, 2015; and (ii) the Angelides Offer Letter, which is incorporated herein by reference and a copy of which was filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on June 10, 2014.

In the December 22, 2015 News Release, the Registrant announced that Mr. Angelides was leaving the Company.

Item 9.01. Financial Statements and Exhibits.

(a) through (c) Not applicable.

(d) Exhibits:

The following exhibit is included with this Current Report on Form 8-K:

 

Exhibit No.		Description
99.1		News Release issued by Abercrombie & Fitch Co. on December 22, 2015

[Remainder of page intentionally left blank; signature page follows]

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				ABERCROMBIE & FITCH CO.
Date: December 22, 2015				By:		/s/ Robert E. Bostrom
						Robert E. Bostrom
						Senior Vice President, General Counsel and Corporate Secretary

 

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INDEX TO EXHIBITS

 

Exhibit No.		Description
99.1		News Release issued by Abercrombie & Fitch Co. on December 22, 2015

 

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Exhibit 99.1

ABERCROMBIE & FITCH CO. NAMES FRAN HOROWITZ PRESIDENT & CHIEF

MERCHANDISING OFFICER, A NEWLY CREATED POSITION

New Brand Presidents Will Be Appointed And Report To Horowitz

New Albany, OH, December 22, 2015-Abercrombie & Fitch Co. (NYSE: ANF) today announced that Fran Horowitz, President of its Hollister brand, has been promoted to President & Chief Merchandising Officer of the Company, effective immediately. In this newly created position, Horowitz will have responsibility for all of the Company’s brands, reporting to Arthur C. Martinez, Executive Chairman.

“Abercrombie & Fitch Co. continues to make encouraging progress executing on its strategy to provide compelling, customer-focused shopping experiences based on clearly defined brand positions. We are pleased with our performance for the quarter to date and are on track to deliver continued sequential improvement in comparable sales and achieve the profit expectations we had coming into the quarter,” said Arthur Martinez, Executive Chairman of Abercrombie & Fitch Co. “Fran’s merchandising skills and her exceptional leadership, which has inspired associates to focus all their efforts on an intense understanding and commitment to our customers, has ignited a turnaround at our Hollister brand. This promotion provides Fran the opportunity to play an even greater role in our future success as we focus on building shareholder value by positioning each of our brands for sustainable growth.”

As President & Chief Merchandising Officer, Fran will have responsibility for all customer-facing activities across the company’s brands. This includes, merchandising, design, planning, inventory management, marketing and stores. At the appropriate time, the company expects to name new presidents for each of its brands, who will report to Horowitz.

Christos Angelides, who served as Abercrombie and Fitch brand president since October 2014, has left the Company.

Horowitz, 51, joined Abercrombie & Fitch as Hollister Brand President in October 2014 from Ann Taylor Loft, where she also held the role of Brand President. For nearly eight years, she worked at Express, Inc., rising to the position of Executive Vice President of Women’s Merchandising and Design. Prior to Express, Horowitz spent 13 years at Bloomingdales in various merchandising roles, and prior to that she worked in buying positions at Bergdorf Goodman, Bonwit Teller and Saks Fifth Avenue. She is a graduate of Lafayette College and received her MBA from Fordham University.

About Abercrombie & Fitch Co.

Abercrombie & Fitch Co. is a leading global specialty retailer of high-quality, casual apparel for Men, Women and kids with an active, youthful lifestyle under its Abercrombie & Fitch, abercrombie kids and Hollister Co. brands. At the end of the third quarter, the Company operated 790 stores in the United States and 175 stores across Canada, Europe, Asia and the Middle East. The Company also operates e-commerce websites at www.Abercrombie.com, www.abercrombiekids.com and www.HollisterCo.com.

Media Contact:

Michael Scheiner

Abercrombie & Fitch Co.

(614) 283-6192

[email protected]

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Investor Contact:

Brian Logan

Abercrombie & Fitch Co.

(614) 283-6877

[email protected]

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

A&F cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Press Release or made by management or spokespeople of A&F involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the company’s control. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we assume no obligation to publicly update or revise our forward-looking statements. The following factors, in addition to those included in the disclosure under the heading “FORWARD-LOOKING STATEMENTS AND RISK FACTORS” in “ITEM 1A. RISK FACTORS” of A&F’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015, in some cases have affected, and in the future could affect, the company’s financial performance and could cause actual results for fiscal 2015 and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this Press Release or otherwise made by management: changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, could have a material adverse effect on our business, results of operations and liquidity; the inability to manage our inventory commensurate with customer demand and changing fashion trends could adversely impact our sales levels and profitability; fluctuations in the cost, availability and quality of raw materials, labor and transportation, could cause manufacturing delays and increase our costs; we are currently involved in a selection process for a new Chief Executive Officer and if this selection process is delayed our business could be negatively impacted; failure to realize the anticipated benefits of our recent transition to a brand-based organizational model could have a negative impact on our business; a significant component of our growth strategy is international expansion, which requires significant capital investment, the success of which is dependent on a number of factors that could delay or prevent the profitability of our international operations; direct-to-consumer sales channels are a focus of our growth strategy, and the failure to successfully develop our position in these channels could have an adverse impact on our results of operations; our inability to successfully implement our strategic plans, including our restructuring efforts, could have a negative impact on our growth and profitability; fluctuations in foreign currency exchange rates could adversely impact our financial condition and results of operations; our business could suffer if our information technology systems are disrupted or cease to operate effectively; we may be exposed to risks and costs associated with cyber-attacks, credit card fraud and identity theft that would cause us to incur unexpected expenses and loss of revenues; our market share may be negatively impacted by increasing competition and pricing pressures from companies with brands or merchandise competitive with ours; our ability to attract customers to our stores depends, in part, on the success of the shopping malls or area attractions in which most of our stores are located; our failure to protect our reputation could have a material adverse effect on our brands; we rely on the experience and skills of our senior executive officers, the loss of whom could have a material adverse effect on our business; we depend upon independent third parties for the manufacture and delivery of all our merchandise, a disruption of which could

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result in lost sales and could increase our costs; our reliance on two distribution centers domestically and third-party distribution centers internationally makes us susceptible to disruptions or adverse conditions affecting our distribution centers; we may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our business; in a number of our European stores, associates are represented by workers’ councils and unions, whose demands could adversely affect our profitability or operating standards for our brands; our facilities, systems and stores, as well as the facilities and systems of our vendors and manufacturers, are vulnerable to natural disasters, pandemic disease and other unexpected events, any of which could result in an interruption to our business and adversely affect our operating results; our litigation and regulatory compliance exposure could have a material adverse effect on our financial condition and results of operations; our inability or failure to adequately protect our trademarks could have a negative impact on our brand image and limit our ability to penetrate new markets; fluctuations in our tax obligations and effective tax rate may result in volatility in our operating results; extreme weather conditions and the seasonal nature of our business may cause net sales to fluctuate and negatively impact our results of operations; the impact of war or acts of terrorism could have a material adverse effect on our operating results and financial condition; changes in and compliance with the regulatory or compliance landscape could adversely affect our business and results of operations; our Asset-Based Revolving Credit Agreement and our Term Loan Agreement include restrictive covenants that limit our flexibility in operating our business; and, compliance with changing regulations and standards for accounting, corporate governance and public disclosure could adversely affect our business, results of operations and reported financial results.

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