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It's only been 180 days since Shelley Broader was named president and CEO of women's retailer Chico's FAS, but the job of turning around the struggling company just got a lot harder.
Barington Capital Group, a New York City investment firm that owns 1.4% of Chico's stock, says it plans to seek two seats on the company's board. The news was unwelcome: In a proxy statement, Fort Myers-based Chico's urges shareholders to reject Barington's nominees to the board at the annual meeting in July.
In a statement, Barington says Chico's “has failed to create meaningful long-term value for stockholders.” The company's stock is down about 77% from its high of $48.90 on Feb. 21, 2006, and its shares have underperformed its peers and the market over short and long periods (see chart).
In recent private conversations, Barington officials have asked Broader to cut overhead and reduce advertising and other expenses, securities filings reveal. Barington acknowledged Chico's efforts to trim $14 million in expenses this year, but the firm pushed Broader to do more. “While Barington generally supports this action, Barington believes that more significant reductions in marketing expenses are needed and can be accomplished while still growing sales,” the investment firm says in the statement.
Barington's nominees are James Mitarotonda, chairman, president and CEO of Barington, and Janet Grove, former vice chairwoman of department store giant Macy's. “Barington is convinced that if the company were more effectively managed and corporate overhead and (other) expenses were reduced to levels comparable to its peers, Chico's could more than double its earnings per share in three years,” the firm says.
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