Mall-based women’s apparel retailer Charlotte Russe Holding Inc. said Wednesday that it is considering a sale of the company among other strategic alternatives to increase long-term growth and profitability. The firm reported a first-quarter loss on marginally higher sales.
Charlotte Russe said it has received interest from third parties but “no timetable has been set for completion of the review” and there is “no assurance that any transaction will result.” The San Diego-based junior retailer hired Cowen and Co. LLC for financial counsel and Covington & Burling LLP and Cooley Godward Kronish LLP for legal counsel.
“While we remain confident in our ability to successfully implement the plan and improve performance, the board is evaluating all alternatives to achieve maximum value for Charlotte Russe shareholders,” said chairman Jennifer Salopek.
The announcement came after shareholder B. Riley & Co. said last month that it would pursue hostile takeover measures should the company’s board not respond to letters demanding a reevaluation of a takeover bid by KarpReilly Capital Partners LP and H.I.G. Capital Partners LLC.
The bid, which the retailer rejected in November, valued the company between $9 and $9.50 a share, or $188 million to $199 million. This represented a 31 to 38 percent premium over its closing stock price the day before the offer.
B. Riley’s Dec. 23 letter came after a similar letter, sent on Dec. 15 from Maryland-based hedge fund Plainview Capital LLC, criticizing the company for rejecting the deal.
Before to the announcement that Charlotte Russe would explore a sale or other transaction, Bryant Riley, founder and chairman of B. Riley, told WWD, “We’ve gotten no response; you cannot blow off and ignore legitimate [buyout] offers at a premium….We’re not going to sit idly by and watch a disservice to shareholders.”
In the first quarter ended Dec. 27, Charlotte Russe reported a net loss of $2.9 million, or 14 cents a diluted share, versus net income of $14 million, or 56 cents a share, in the year-ago period. Net sales for the period rose 1 percent to $240.7 million from $238.2 million. Excluding pretax charges related to its recent management transition of $2.2 million, the loss in the most recent quarter was 7 cents a share.
Comparable-store sales for the quarter fell 9.1 percent. The company said it opened eight new stores during the period, and reported it had $55 million in cash and no long-term debt at the end of the quarter. The company also said it recorded charges of $2.2 million related to recent management transition.
“We’re operating conservatively in this uncertain environment by protecting our strong cash position, reducing inventory levels, carefully managing expenses and lowering capital expenditures,” said chief executive officer John Goodman.
Based on the earlier disclosure of the company’s strategic review, Charlotte Russe said during the earnings conference call that it has canceled its analysts and investors day next Wednesday in New York.
The company said it anticipated sales trends to remain “soft” during the second quarter, “reflecting the macro environment, the Easter shift and the seasonality of the company’s business model.” Comparable-store sales are expected drop in the mid- to high-single digits during the period while a net loss of 10 and 20 cents a diluted share, exclusive of transition costs, is forecast.
The retailer also said it has reduced its new store opening and capital expenditure plans to 20 locations and $30 million, respectively for the year.
Analysts expect a loss of 8 cents a share on sales of $188.6 million for the second quarter.
EXCLUSIVE: Two and half months after John Targon, cofounder and codesigner of Baja East, was hired as creative director of the contemporary division at Marc Jacobs, he has left the company, WWD has learned. Marc Jacobs International, which is owned by LVMH Moët Hennessy Louis Vuitton, confirmed Targon’s departure in a statement: “John Targon is a talented designer and we appreciate the work he has done here. Ultimately working together did not make sense for the brand and we wish him the best.” Read the story by @jessiredale, link in bio. #wwdnews
@theluxurycollection is officially launching a collection, tapping Sofia Sanchez de Betak for the capsule. Over 30 styles will be featured in the Chufy x The Luxury Collection, debuting next month at Bergdorf Goodman, The Webster, FiveStory and more. De Betak, known as “@chufy,” drew inspiration for the collection from her trips to Japan in the past year #wwdfashion
@lhd, founder and CEO of @thewebster, has teamed up with @lebonmarcherivegauche for the European launch of her ready-to-wear line, LHD. The launch will come with an exclusive pop-up opening today that’s set to run through May 20. Located on the second floor, it carries her debut Miami-themed resort collection, launched in November as see-now-buy-now. #wwdfashion
@longchamp, which marks its 70th anniversary this year, just opened its biggest U.S. store on Manhattan’s Fifth Avenue. On the lower level there’s a floor-to-ceiling display of the brand’s iconic Le Pliage bag – in all of its different colors, shapes and sizes. Customers can also have their product personalized in-store by imprinting names, initials or emblems. #wwdfashion (📷: @ericmtownsend)
“Whenever I’m in that place of sound and music, I don’t have fear or nervousness…This album has a lot of themes of courage and boldness and I want to be the soundtrack for people’s lives. I’ll be so happy if [my songs] evoke strength in people, which I know music has done for me,” says @kimbramusic of her newest album “Primal Heart.” The New Zealand-born singer sat down with WWD to talk about her music, newest tour and connecting with hear fans — read more on WWD.com #wwdeye (📷: @jilliansollazzo)
Luxury handbag resale company @rebagofficial is planning to sell a rare collectible for $70,000: the @hermes White Crocodile Himalayan Birkin. The exclusive Birkin sold for about $100,000 in 2008, when @davidbeckham bought one for his wife @victoriabeckham to add to her collection. Read more about the rare Birkin on WWD.com #wwdaccessories
With her costume pearl necklace and what-you-see-is-what-you-get style, Barbara Bush, who died Tuesday at age 92, was a straight-shooter from start to finish.
Born Barbara Pierce in New York City, Bush served as the 37th first lady, as well as the country’s second lady from 1981 to 1989. In addition to being part of the longest presidential marriage — 73 years — Bush also had the unlikely distinction of having one son, George W., become the 43rd president and another son, Jeb, run unsuccessfully in 2016. Having served as second lady during the Reagan administration’s two terms and lived all over the world during her own husband’s ascending political career, Barbara Bush made it clear that literacy — not fashion — was her priority. Read more from Rosemary Feitelberg’s obituary on the late First Lady in WWD.com, link in bio. #barbarabush #wwdnews
Western and ’90s trends have influenced denim for fall 2018. Think raw, dark and coated jeans mixed with bold prints and tough leather. #trendtuesdays #wwdfashion (Styled by @thealexbadia;📷: @ryanplett)