Log in
Login
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  Equities  >  Nyse  >  Gap Inc    GPS

GAP INC (GPS)

Delayed Quote. Delayed  - 05/25 04:38:55 pm
18.22 USD   +0.72%
05/24DJBarington Capital Starts a Proxy Fight at Retailer Chico's
05/23 GAP : shutting 75 stores this year, 53 in Japan
05/20 Applied Materials, Gap and Interoil are among stock gainers
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 
The feature you requested does not exist. However, we suggest the following feature:

Barington Capital Starts a Proxy Fight at Retailer Chico's

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/24/2016 | 03:06am CEST

Activist investor Barington Capital Group LP has launched a fight for board seats at apparel chain Chico's FAS Inc.

Barington is nominating two directors to serve on the company's nine-person board, confirming a report by The Wall Street Journal on Monday night. The nominees are former high-ranking Macy's Inc. executive Janet Grove and Barington Chief Executive James Mitarotonda.

The activist fund, which owns a 1.4% stake in Chico's, isn't agitating for a leadership change or sale of the business. Instead, it is arguing that the company's expenses are too high relative to its peers and its centralized structure is inefficient.

People familiar with the situation said Chico's has been cooperating with Barington and already has begun addressing some of the activist's concerns. The retailer separately has been seeking new members to strengthen its board, they said.

Chico's recruited Shelley Broader away from Wal-Mart Stores Inc. to be its CEO in December. Ms. Broader, who ran Wal-Mart's Europe, Middle East and Africa region, previously held executive roles at crafts chain Michaels Stores and grocer Delhaize Group.

In April, she realigned Chico's marketing and digital functions by placing more decision making at the brand level in a move expected to save $14 million a year. While Barington supported that reorganization, it believes more significant cost cuts are necessary, the people said.

In a news release Tuesday morning, Barington said Chico's is "significantly undervalued and could more than double its earnings per share if more effectively managed." Barington said it owns about 1.4% of Chico's shares outstanding.

Chico's stock price has dropped 36% during the past 12 months to $10.90, compared with a 4.7% decline in S&P 500 apparel retail sub industry index. The company has a market value of $1.45 billion as of Monday's close.

Apparel retailers ranging from the Gap Inc. to department stores like Macy's have been struggling as shoppers make more of their purchases online and allocate more of their disposable income to dining out and travel.

Chico's is one of the few brands that targets older women, which analysts say is an under served group.

In addition to its namesake stores, its brands include White House Black Market and lingerie label Soma. The company operated more than 1,500 stores and employed 22,700 people as of Jan. 30.

Revenue fell to $2.64 billion last fiscal year, as sales at stores open at least a year declined 1.5%. The company's profit tumbled to $1.9 million, weighed down by more than $100 million in charges largely tied to the closing of another chain of stores called Boston Proper.

According to people familiar with her strategy, Ms. Broader plans to improve the company's financial performance through cost cutting and more effective marketing; by making more use of data in decision making; and by better integrating the online and offline operations.

In early 2015, Chico's held talks with buyout firm Sycamore Partners, according to people familiar with the matter. Sycamore dropped its pursuit after failing to line up financing for the deal, these people said.

Barington has had success in the retail space before, including a proxy fight last year at Children's Place Inc. that led to one seat for Barington and a say in selecting a second director.

This year, the fund settled a pending dispute with Avon Products Inc., helping to appoint a new director at the beauty-products company. In 2013, it kick started the battle over Darden Restaurants Inc., calling for that conglomerate to break up.

The fund's founder, Mr. Mitarotonda, started his business career at department store giant Bloomingdale's and has long invested in retail companies, often seeking board representations.

Chico's previously had reached out to Ms. Grove about joining its board, but those conversations didn't lead to her being nominated, a person familiar with the matter said.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and David Benoit at david.benoit@wsj.com

share with twitter share with LinkedIn share with facebook
share via e-mail
0
React to this article
Latest news on GAP INC
05/24DJBarington Capital Starts a Proxy Fight at Retailer Chico's
05/23 GAP : shutting 75 stores this year, 53 in Japan
05/20 Applied Materials, Gap and Interoil are among stock gainers
05/20 GAP : Announces Second Quarter Dividend
05/20DJGap to Close Stores Amid Sales Slump -- WSJ
05/20 GAP : to shutter all Old Navy stores in Japan
05/19 Gap to close 75 Old Navy, Banana Republic stores outside North America
05/19 Gap to close 75 Old Navy, Banana Republic stores outside North America
05/19 GAP : closes 75 stores outside North America
05/19 GAP INC : Results of Operations and Financial Condition, Costs Associated with E..
Advertisement
News chart
Full-screen chart
Income Statement Evolution
More Financials