Chico's reassures shareholders as investor spat continues
Chico's FAS has reassured shareholders the company is "successfully executing" its strategic plan in the latest move amid a deepening rift between the US women's wear retailer and activist investor Barington Capital Group.
Barington has been pushing to add two of its representatives – Janet Grove and James Mitarotonda – to the Chico's board of directors in a bid to improve it's "vast value potential" and to ensure that stockholder's interests are represented in the Chico's boardroom.
The New York-based hedge fund also urged shareholders to "stop, look and listen" before voting in the board elections on 21 July.
But in a letter dated yesterday (16 June) the retailer claims Barington has failed to demonstrate any ideas, vision or expertise that would warrant board representation in place of Chico's nominees: Bonnie Brooks, vice chairman of Hudson's Bay Co, and Bill Simon, the former president and CEO of Walmart's US operations.
Now, David Walker, chair of Chico's board, claims in the letter "positive changes" are underway at Chico's, adding: "The company has taken significant actions and is making substantive progress on implementing its new plan. This progress is just beginning as we expect to announce additional initiatives in the coming weeks."
Chico's says Baringon is "misleading" shareholders and is "attempting to take credit" for changes Chico's had already made or considered.
Walker signs off claiming Barington's actions are "undermining the future of Chico's and it's ability to "continue driving profitable growth and value creation". He writes: "Barington's ideas are not new; its candidates lack key skills; and its opposition campaign is misguided, given the significant progress already in process under new leadership."
Chico's most recently posted a fall in first-quarter profit, with net income slipping to $31.1m from $32.5m a year earlier, and net sales dropping 7.9% to $643m.
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