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Abercrombie & Fitch Co. (NYSE:ANF) renewed its contract with Chairman and CEO Michael S. Jeffries yesterday, leading many of us to ask the question: Why? After all, this is the same guy who in 2006 -- while explaining his company's strategy -- remarked, "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."

That quote alone is enough for outsiders to second-guess ANF's decision. But as the article explains, even some insiders were agitating for a management change -- and not only for Jeffries' lack of PR judgment. Specifically, Engaged Capital recently began campaigning for the executive's removal. In its letter to the teen retailer, the activist hedge fund explained, "shareholders have not benefited as many years of mismanagement have led to persistent underperformance."

"Underperformance" is exactly right. During Abercrombie's most recent quarterly earnings report, the company said net sales sunk 12%, with same-store sales falling by 14%. In other words, Abercrombie is no longer attracting kids in general, let alone the cool ones. All told, these fundamental missteps have led the stock to shed nearly 30% in 2013, despite it being one of the most bullish markets in years.

Still, sentiment toward Abercrombie & Fitch Co. (NYSE:ANF) is surprisingly resilient. Out of 23 covering analysts, 10 brokerages still rate the shares a "buy" or better -- including eight "strong buys." What's more, the consensus 12-month price target of $38.21 sits nearly 13% higher than the security's current price of $33.94. Should the retailer's struggles continue, a round of analyst downgrades and/or price-target cuts could usher ANF shares even lower.

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