Shares of Chico’s FAS Inc. slipped 1.5 percent in midmorning trading Friday following what seems to be a down day for the equity markets.
Chico’s responded to assertions in a letter Thursday from activist investor Barington Capital, which detailed plans for more cost-cutting and other thoughts on how to improve the retailers’ operations and, in turn, boost the stock price.
In its response, Chico’s said its new president and chief executive officer Shelley Broader has been a ”catalyst” for change, making a point that some of the changes either were made, or were in progress, before Barington began discussions with the company. The company also said that “all of the suggestions Barington previously provided in conversations with management had already been evaluated in connection with Ms. Broader’s review, and many are being implemented as part of the company’s new strategic plan.”
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Chico’s noted that it too believes that growing Soma, and all of its brands, is a priority, although the company said that instead of opening 200 to 300 stores, a more disciplined store growth approach would balance the increasing percentage of sales growth across all brands that is being driven by digital commerce. The retailer noted that Broader’s compensation is in line with peers, with a pay mix that corresponds with incentivizing enhanced value creation. Chico’s said her compensation was established following a detailed competitive analysis by consulting firm Frederic W. Cook & Co.
Shares of Chico’s were trading at $11.25 at 11:55 a.m. Other retail stocks were also in the red. Shares of Sears Holdings were down 4.5 percent to $12.84 as concern continued to grow that the company might sell off its proprietary brands — Kenmore, DieHard and Craftsman — instead of just expanding on its licensing opportunities. Teen retailer American Eagle Outfitters was down 0.3 percent to $15.84, although its higher-priced competitor down the mall Abercrombie & Fitch was up 0.05 percent to $19.51. Gap Inc. shares were on the rise, sending the stock up 3.4 percent to $18.96, even though Gap said Thursday that May comps fell 6 percent.
The day’s trading sessions began on a lackluster note, with the Dow Jones Industrial Average down 0.4 percent in mid-morning trading to 17,765.08 and the Nasdaq down nearly 0.9 percent to 4,929.71.
A weak jobs report earlier in the morning came in at a disappointing 38,000, the smallest jobs gain since September 2010, according to Nariman Behravesh, chief economist at IHS. He said the weakness could “delay the next Fed rate hike.”