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By Michael Flaherty
NEW YORK, May 24 (Reuters) - Chico's FAS Inc CHS.N is
headed for a proxy fight with shareholder Barington Capital, as
the women's apparel retailer resists the activist hedge fund's
push to put two nominees on the company's board.
Barington nominated its chairman and chief executive, James
Mitarotonda, and industry veteran Janet Grove, who served as
vice chairman of department store operator Macy's Inc M.N from
2003 to 2011, the company said in a statement on Tuesday.
Chico's quickly followed by saying it would nominate Bonnie
Brooks, vice chairman of Hudson's Bay Co HBC.TO , and Bill
Simon, the former president and chief executive of Walmart U.S.
WMT.N , to run for election to its nine-member board. Two of
Chico's existing directors will step down this year, the company
said.
Chico's said members of its board reviewed Barington's
nominees and spoke to them directly, but decided in the end that
Brooks and Simon "have the most current and relevant skill sets
and experience." Simon and Chico's CEO Shelley Broader both
worked at Wal-Mart (NYSE:WMT) during the same period, starting in 2010.
Broader became CEO in December and soon launched a
turnaround effort, which included plans to close 170-175 stores
through 2017.
Despite the company's moves to refresh the board and reduce
costs, Barington is pressing ahead with its proxy fight.
Barington, which owns 1.4 percent of the company, said that
Chico's shares are down 77 percent from its all-time high in
2006 and that it has significantly underperformed its peers. The
New York-based hedge fund also said its concerned about Chico's
high headquarter and advertising expenses.
Unlike other activist campaigns that push for the return of
cash to shareholders, an outright sale or management team
changes, Barington is mainly targeting the underperformance and
expense concerns for now.
BOUTIQUE
Chico's was founded in 1983 as a boutique selling Mexican
folk art and cotton sweaters from a store on Florida's Sanibel
Island. The company, with a market worth of about $1.5 billion,
caters to women 35 years and older.
If Barington and Chico's FAS cannot reach an agreement on
the nominations before an annual meeting on July 21, the fate of
the nominees will go to a shareholder vote.
Chico's stock has fallen around 40 percent since last May.
Shares of its competitor, Ascena Retail Group ASNA.O , have
fared even worse, down by more than half from a year ago.
Chico stock was selling at $10.93 a share, up 0.28 percent,
on the New York Stock Exchange late on Tuesday morning.