Shareholders expressed “concern” over “a lack of commitment” at Perry Ellis

Shareholders expressed “concern” over “a lack of commitment” at Perry Ellis

Two Perry Ellis shareholders are calling on the US apparel business to form a special committee to explore strategic options including a sale.

Legion Partners and CalSTRS, which collectively own around 6.3% of the company's shares, sent a letter to the board on 16 October, which was rejected.

In the letter, the shareholders expressed "concern" over what they said appears to be "a lack of commitment" at Perry Ellis to take the necessary steps to ensure optimal long-term value for all shareholders. "We believe it is critical at this juncture that the board be open to all alternatives for enhancing shareholder value," they added.

"We believe there is serious interest in Perry Ellis from strategic buyers, and that the board has a fiduciary responsibility to objectively evaluate all viable alternatives to maximise value for all shareholders," said Chris Kiper, managing director of Legion Partners. "This evaluation process must consider the risk profile of alternative courses of action from Perry Ellis' current strategy.

"We are concerned that the status quo, under the leadership and control of the Feldenkreis family, entails a very high risk that Perry Ellis will continue to underperform, causing irreparable value destruction for shareholders."

The shareholders pointed to the firm's long-term "extremely poor" stock and operational performance. This is a result of "significant long-term execution and leadership deficiencies", they noted, that unless addressed, will continue to undermine value.

"Based on our discussions with shareholders, including many calls we have received since we filed our initial 13D, it is clear to us that shareholders are unhappy with the status quo and want to see substantial change," they concluded.

In response to the letter, a spokesperson for Perry Ellis said the board and management team are committed to acting in the best interests of the company and its shareholders.

"Perry Ellis strives to maintain constructive, ongoing communication with its shareholders and welcomes the views and opinions of its shareholders with the goal of enhancing value for all shareholders. The company remains committed to driving value for all shareholders and will continue to assess opportunities and take actions to achieve this important objective."