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Dissatisfied with the leadership of Chico’s FAS, some institutional investors withheld their votes Thursday for a key board member at the company’s annual meeting.
This story first appeared in the June 27, 2008 issue of WWD. Subscribe Today.
More than 45 percent of the institutional investors withheld ballots for John Burden 3rd, said Greg Taxin, managing director of Spotlight Capital Management LLC, a private investment fund that is a Chico’s shareholder. Taxin said Burden, who was reelected with board members David F. Walker and John J. Mahoney, has a conflict of interest because his son-in-law is on Chico’s management team.
Burden, who has been a director since 1997, sits on the Corporate Governance and Nominating Committees, and until recently, sat on the Compensation Committee, Taxin said.
“It was a protest vote, to show the board that we are unhappy and they need to uphold their fiduciary responsibilities,” Taxin said.
He took the floor at the meeting and urged the board to fire president, chairman and chief executive officer Scott Edmonds, whom he said is the wrong person to turn around the company.
Chico’s has reported that first-quarter net income in the three months ended May 3, hurt by increases in expenses and large reductions in comparable-store sales, fell to $12.7 million, or 7 cents a diluted share, from $47.2 million, or 27 cents, in the year-ago quarter. Results included a pretax charge of $2.2 million related to the closure of seven Soma stores.
During the meeting, Edmonds discussed the strategies that management is executing to revive Chico’s, such as increasing its emphasis on customer service, improving merchandise and slowing down store growth.
“Despite the current challenges, we remain confident in our long-term strategies and are optimistic about the future,” Edmonds said.
Shares of Chico’s fell by 5.26 percent to close at $5.76 in trading Thursday on the New York Stock Exchange. The 52-week low was $5.42. The high was on June 28, when the stock hit $25.33 in intraday trading.