The Wall Street Journal-20080116-Holders Seek Charming Shoppes Change
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Holders Seek Charming Shoppes Change
A group of Charming Shoppes Inc. investors nominated a slate of three directors, saying the investors are "deeply concerned" with the company's business strategy, capital spending and "poorly performing stock price."
The group, led by investment firm Crescendo Partners, owns a combined 7.9% stake in the Bensalem, Pa., retailer of plus-size women's clothing. Crescendo last week reported a 6.5% stake in the company.
In its letter to the board, the investor group said the company "needs to regain its focus" on merchandise for "its mostly moderate to middle-income plus-size female consumer." The group advocates exploring the sale of noncore assets, including real estate and Charming Shoppes' catalog and retail business; slowing store expansion; focusing on merchandise improvements; cutting costs; and buying back "a significant amount" of shares.
The company's stock is down two-thirds over the past year. Its shares rose nine cents, or 2.1%, to $4.44 at 4 p.m. yesterday in Nasdaq Stock Market trading.
Charming Shoppes, whose brands include Lane Bryant and Fashion Bug, responded by saying that the board and management team "are committed to acting in the best interests of the company and its shareholders."
It said executives and board members have talked to the group and are willing to continue the conversations but "the board of directors will not be distracted from its focus on the best interests of all Charming Shoppes shareholders by the threat of a proxy contest from a dissident shareholder group."
The company pointed out that seven of the eight board members are independent.
Charming Shoppes has issued multiple warnings in the past year; last week, it said fiscal fourth-quarter results will miss prior estimates because of lower store traffic during the holidays. That prompted larger markdowns, which cut into profit margins.
