In what is turning into a tit-for-tat proxy fight, Barington Capital Group has sent another letter to the shareholders’ of women’s specialty apparel retailer Chico’s FAS Inc.
The latest missive follows four days after Chico’s sent its own letter Friday to shareholders. And while the arguments that each side presents in their back-and-forth letters are essentially a reiteration of prior statements, there’s been an escalation of the degree in each subsequent response. Following the traditional vote the white card for the Chico’s slate versus the blue one representing Barington’s nominees, Chico’s upped the ante with a subsequent letter to shareholders on Friday, one that included a link to a video of chief executive officer Shelley Broader.
Now Barington, which last week took issue with Chico’s planned $6 million spend to “ward off helpful stockholder input,” has come back with a response — this time focusing on the qualifications of the nominees on both slates. It also mentioned the Broader video, noting that the “proxy solicitation is not a referendum on the company’s new ceo Shelley Broader….Rather, this is a campaign to add independent, stockholder-focused directors to the Chico’s board….”
The activist firm has been opposed to Chico’s nominee Bonnie Brooks, who is vice chairman of Hudson’s Bay Co., on conflict-of-interest grounds. Specifically, it argued that Hudson’s Bay nameplates Saks Fifth Avenue and Lord & Taylor “directly compete” with Chico’s brands in its different product categories. Barington also questioned the “judgment of the board’s incumbent directors to put the company in a position where its strategic plans and confidential information could fall into the hands of its competitors.”
Chico’s earlier this month refuted that claim, stating, “Neither Hudson’s Bay Co. nor any of the department stores within its portfolio, including Saks Fifth Avenue and Lord & Taylor, are competitors in any practical sense to Chico’s FAS or any of its brands….Our brands serve different price points, different geographic areas and different consumer demographics.”
Chico’s said Tuesday that its estimate of its “customers’ apparel spend at these department stores is so small that it has traditionally not even appeared on the company’s market share analysis.”
Barington in its letter also said that none of the incumbent directors have meaningful apparel merchandising experience,” and said its nominee, Janet Grove, who is former vice chairman of Macy’s Inc. and the former ceo and chairman of Macy’s Merchandising Group, has the skill set for both the private brand side of the business, as well as the branded component. Nor does she serve as a director for a competing retailer, Barington pointed out.
But what’s new this time, in pushing its ceo Jim Mitarotonda to the forefront of investors’ minds, is the inclusion of comments from former C-suite executives commenting on Mitarotonda’s contribution as a director on boards that he’s served on before.
The repeated exchange of letters is to be expected, given that each one is positioning itself as having the best slate of board nominees to the retailer’s board. What remains to be seen is just how much impact the letters will have on shareholders when it comes time to elect the directors on July 21, when the company holds its annual meeting of shareholders.