Mad Money

Cramer: With no CEO, this retailer is crushing it

Cramer: With no CEO, this retailer is crushing it!

Jim Cramer has always believed in the power of a CEO. A good chief can turn around a company, but a bad one can run even the best companies into the ground.

"Sometimes having no CEO is better than having a truly terrible chief executive," the "Mad Money" host said. (Tweet This)

This was evident when Cramer examined the case of teen retailer Abercrombie & Fitch. It reported a fantastic quarter a little over a week ago, which sent the stock soaring 25 percent in one session. But what Cramer found most impressive about its results was that it did all of this without a permanent CEO.

In fact, former CEO Mike Jeffries retired nearly a year ago —and the company is doing better for the first time in ages.

You would think that Abercrombie would be directionless with no one at the helm, but you would be wrong
Jim Cramer
Pedestrians are reflected in the window of an Abercrombie & Fitch store in New York.
Craig Warga | Bloomberg | Getty Images

Mike Jeffries was the long time CEO who basically created the modern Abercrombie back in the 1990s. But then Abercrombie's stock went into a multi-year tailspin in 2011, partially due to a series of mistakes made by Jeffries that gave the impression that he was losing touch.

As a result, Cramer put him on the "Mad Money" Wall of Shame in Nov. 2013. This is the infamous gallery list of the worst CEOs in the business. These people have mismanaged their companies so badly that Cramer believed they would create value simply by announcing their resignation.

Sure enough, on the day that Jeffries announced his retirement, the stock shot up 8 percent. Since that time, the company has not found a new CEO.

Then who the heck is running the company?

Read more from Mad Money with Jim Cramer

Cramer Remix: Guard against this in a portfolio
Cramer: Best insurance policy for your portfolio
Cramer: Forget sectors! A better way to diversify

When Jeffries retired, Abercrombie's chairman Arthur Martinez was named executive chairman. A team was created to be in charge of the company's strategic direction and day-to-day operations, which consisted of COO Jonathan Ramsden, Abercrombie & Fitch brand president Christos Angelides, and Hollister Brand president Fran Horowitz.

It has been nearly a year and Abercrombie does not have a new CEO, and investors have no idea when they will hire a new one. The company is essentially being run by committee.

"You would think that Abercrombie would be directionless with no one at the helm, but you would be wrong," Cramer said. (Tweet This)

In fact, since the time the team has taken over the company, it has done a remarkable job of executing a tremendous turnaround. Back in April, the committee announced it would end various out-of-date policies that held the company back. This included the so-called "look policy," that dictated the people stores could hire and how they could dress.

The new team also turned up the lights in stores, turned down the amount of strong cologne, and stopped putting shirtless men outside of many of the locations.

"I think this is an amazing story, and it shows just how powerful mismanagement can be," Cramer said.

Despite all of the positive changes that Abercrombie & Fitch has made, Cramer is not ready to recommend the stock. This is partially because the company has already made several quick wins, and partially because it still doesn't have a CEO.

Additionally, after its recent terrific quarter the bar has been raised. That means it will be harder for Abercrombie to beat the numbers down the road.

Ultimately, sometimes a CEO can be so horrible that literally anything is an improvement, including no CEO at all. Cramer saw this occur with Abercrombie & Fitch, as he thinks the turn is less about what it is doing—and more about escaping the consequences of the damage from its former CEOs mismanagement.

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine

Questions, comments, suggestions for the "Mad Money" website?