US women's wear retailer Chico's FAS has rejected an unsolicited proposal from private equity firm Sycamore Partners.

In a statement, Chico's said its board of directors unanimously rejected Sycamore's proposal which was received on 10 May to acquire the firm for $3.50 per share in cash. 

"After reviewing the proposal in consultation with its independent financial and legal advisors, the Chico's FAS board determined that Sycamore's proposal substantially undervalues Chico's FAS and is not in the best interests of Chico's FAS shareholders," it said.

The move follows the board's review and rejection of another Sycamore proposal last month to acquire the company for $4.30 per share.

"Chico's FAS benefits from a strong operating and financial foundation, including a portfolio of differentiated brands, loyal customers and robust omnichannel capabilities," said chair of the board David Walker. "Sycamore's interest underscores the upside opportunities that these competitive advantages create, but the prices Sycamore has proposed are inadequate and fail to recognise the full value of the company and its future prospects." 

The news comes after Chico's swung to a loss in the fourth quarter, reporting a net loss of US$16.6m for the three months to 2 February 2019, compared to net income of $28m in the year-ago period, and the departure of CEO and president Shelley Broader last month. 

Bonnie Brooks, former vice chair, president and CEO of Hudson's Bay Company was appointed interim CEO with immediate effect. 

"We are encouraged by the direction Bonnie Brooks is taking with respect to our company's merchandising and marketing strategies since being appointed interim CEO.  In addition, our search for a permanent CEO is well underway, with great executive candidates who have a proven track record in the apparel industry being considered.  We are confident in our ability to fully capitalise on the market positioning of each of our brands to drive topline growth across our portfolio and deliver value to our shareholders well in excess of what Sycamore has proposed," Walker added.