The gloves are coming off in the proxy battle between The Children’s Place and its activist investors, Barington Capital Group and Macellum Capital Management.

The retailer, seeking to persuade shareholders to its side of the fence come voting time, has filed an investor presentation showcasing what it thinks are performance highlights that shareholders should keep in mind when deciding on board constituency.

The Children’s Place board on April 9 rejected the request of the activists, in a March 11 letter to the board, for board representation. Each side since then has said the other isn’t playing fair, nor does each side at this point seem willing to have a discussion with the other prior to the annual shareholders’ meeting on May 22. While the two just could be working through the “positioning stage,” barring a meeting and some resolution over the next few weeks they are headed for a proxy fight and perhaps an ugly shareholders’ meeting.

The funds are seeking to nominate Seth R. Johnson and Robert L. Mettler for election to the retailer’s board. In their investor presentation filed on Monday, they charged that two new independent directors can provide a fresh perspective in evaluating the retailer’s performance. They also took issue with some of the retailer’s performance metrics since current chief executive officer Jane Elfers took over in January 2010. Also noted in their presentation is the suggestion that the $225 million in cash and investments on the balance sheet could be used in part for aggressive share repurchases. That’s often one way to goose the share price. And while the funds suggest that private equity and strategic buyers could be interested in the retailer, The Children’s Place isn’t likely in favor of that move.

In several references, the hedge funds compared the specialty chain with Carter’s Inc., comparing both executive compensation and certain operating metrics.

The Children’s Place is seeking to have Kenneth Reiss and Stanley Reynolds reelected to the board. It also has charged that the funds have made some “ill-formed conclusions.”

Noting that the stock is currently trading near an eight-year high, and that certain initiatives increase the diversification of its revenue mix — such as a wholesale business started in 2012 that had eight wholesale accounts at the end of 2014 — the retailer described the activists in the third slide of its presentation as having an “unfocused and inconsistent list of demands.”

It also took a swing at the comparison to Carter’s on how the retailer has underperformed its peers, noting that Carter’s is “one handpicked peer that is predominantly infant-focused and wholesale oriented.” Intriguingly, the retailer in one slide said that “kids’ apparel has become more competitive.” While it names Gymboree and Gap Kids as obvious competitors on the specialty retail front, The Children’s Place slide also lists Buckle and Tilly’s, both of which tend to trend older in the consumer food chain. And the children’s retailer, which sells kids’ apparel from newborns to age 12, also took issue with activist nominee Seth R. Johnson, stating that he “has a clear conflict of interest as he currently serves as director of Tilly’s.”

As for the activists’ charge that the retailer lacks an effective board, The Children’s Place presentation emphasized that strong corporate governance is evidenced by the “separation of the ceo and chairman roles [and] enhanced stock ownership guidelines for executives and independent directors.”

In response to the charge of the activists concerning poor decision-making over capital allocation, such as expenditures for a store footprint expansion initiative that was later reversed, The Children’s Place opted to note that the company has returned $493 million to shareholders through a capital return program begun in 2009 that includes stock repurchases and the company’s first dividend. The retailer’s board approved a quarterly dividend of 13 cents a share in March 2014, and two months ago raised the dividend to 15 cents.

The activist funds declined comment at press time, although they filed an updated proxy statement with the Securities and Exchange Commission asking shareholders to vote the “Blue” proxy card in support of the activist investors. 

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