Bebe Stores Inc.’s silence amid very public concerns about the state of the business raised by an activist investor has been broken.
The Brisbane, Calif.-based company’s chief executive officer, founder and largest shareholder Manny Mashouf sent a letter filed with the Securities and Exchange Commission today to Michael Zimmerman, founder of Connecticut-based investment firm Prentice Capital Management LP, pushing back on allegations that the company is sitting back as the business slides.
Mashouf questioned Zimmerman’s motives in being so public about his concerns in the business in light of an offer made last month to review what the company has done over the past three years to improve the business upon his signing of a non-disclosure agreement.
“…I have to question your intent and sincerity in your continued correspondence with the company and the public, claiming that we did not respond to your letter and have refused to engage with you, after I spent over an hour on the phone with you….” Mashouf said in his letter.
Mashouf also reiterated in his letter the offer to go over the company’s turnaround tactics and addressed other issues raised in past letters from Prentice Capital.
Mashouf’s pay, another point of contention between the two, is less, he said, than that of the past two ceos’ once base salary, guaranteed bonus and stock grants are factored in.
“Furthermore, I can assure you that neither the board nor management is content to simply conduct ‘business as usual,’” Mashouf wrote, adding that he and the board are working to course-correct the business’s path over the last three years.
Bebe, for the most recent fiscal year ended July 4, saw its business improve. Net sales were up 0.7 percent to $428 million, while the company narrowed its loss from $59.2 million in the prior year to $25.4 million. Same-store sales for the fiscal year also improved from a contraction of 3.2 percent in the year-ago period to a rise of 3.1 percent.
Mashouf returned to the retailer in February after the departures of former ceo Jim Wiggett and chief financial officer Liyuan Woo were revealed. The two executives’ exits also came with a round of layoffs that cut nearly 15 percent of Bebe’s corporate staff, or about 45 jobs.