Barington Capital Group had dropped its six week campaign for seats on the board of US women's wear retailer Chico's FAS, less than a week before the company's annual meeting of stockholders on 21 July.

The New York-based hedge fund, which collectively owns more than 1.6% of the outstanding shares of common stock of Chico's, says it "remains deeply committed" to its investment in the company and will continue to "carefully monitor" its progress.

The news comes amid a deepening rift between the retailer and activist investor which developed into a spat over board seats.

Barington was fighting to add two of its representatives – Janet Grove and James Mitarotonda – to the Chico's board of directors in a bid to improve its "vast value potential" and to ensure that stockholder's interests are represented in the Chico's boardroom.

Chico's shareholder Barington claims change is needed

But Chico's claimed Barington 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.

Chico's reassures shareholders as investor spat continues

Now, Barington says its expects Chico's CEO Shelley Broader and its board to "deliver on its promises to stockholders" as it has terminated its campaign to elect two independent, stockholder-focused representatives to the board.

The investor will be withdrawing its director nominations and is now encouraging stockholders who have already submitted a blue proxy card to re-vote.

"For the past several months, we have worked tirelessly to ensure that positive changes are made at Chico's," says James Mitarotonda, chairman and CEO of Barington. "We are proud to have served as a catalyst for a number of improvements that the company has recently announced. Our efforts have undoubtedly increased the pressure on the board and management to address the issues we have raised and to deliver actual results to stockholders. We will be monitoring the company closely."

Over the course of the spat, Chico's has repeatedly stated that positive changes are underway, claiming it is on the right path to profitable growth and value creation through its strategic plan under the guidance of Broader.

Now, proxy advisory firms Institutional Shareholder Services and Glass Lewis agree. A statement from Glass Lewis says: "Despite the company's long-term stock price underperformance and disappointing historical financial results…at this very early stage, we're inclined to recommend that shareholders allow more time for the new CEO and new operating plan to potentially deliver improved results."

Since Barington began its dialogue with the company, Chico's has announced US$65-$85m in planned cost reductions, replaced two long-tenured directors and begun the process of declassifying its board.

Additionally, Bonnie Brooks is retiring from her position at Hudson's Bay Company, which helps address a serious conflict of interest that Barington identified.