A week after receiving a buyout offer, Fort Myers-based Chico’s FAS' board of directors remains steadfast in its strategy — saying a resounding “thanks, but no thanks” to its suitor, an inside job by its largest shareholder, New York private equity firm Sycamore Partners.
In the process, the company proclaimed interim CEO Bonnie Brooks and the talent pool available to replace departed CEO Shelley Broader as salve for the company’s persistent fiscal wounds.
Chico’s FAS — which owns the women’s apparel brands Chico’s, White House Black Market and Soma and is one of Southwest Florida’s largest employers — had previously rejected an offer of $4.30 per share from Sycamore, which owns 6.6% of the company. Upon further evaluation on the heels of Broader’s late April unexpected exit, Sycamore hoped to entice the Chico’s board with an even lower offer of $3.50 per share.
Sycamore relied on 2018 revenue figures and other recent news to bolster its proposal. Chico’s same-store sales dropped 4.9% in the previous fiscal year, and total revenue declined 8.7% in 2018, from $2.3 billion to $2.1 billion. The company announced earlier this year it will close hundreds of stores across all three brands to reduce costs and re-orient its retail strategies. With Sycamore poised to pounce on what it termed “the rate and severity of the deterioration of the company’s business” with its revised and reduced offer, Chico’s responded with an optimistic outlook accompanying the board’s unanimous rejection, saying Sycamore “significantly undervalued” the company.
"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,” says Chico’s Chairman David Walker in a statement. “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 capitalize on the market positioning of each of our brands to drive top-line growth across our portfolio and deliver value to our shareholders well in excess of what Sycamore has proposed.”