Chico's board battle heats up

The fight over the future of women's retailer Chico's FAS has become more contentious, with the company firing back at one of its most vocal activist investors.

Barington Capital Group, a New York City investment firm that owns 1.4% of Chico's stock, says it plans to seek two seats on the company's board at the July annual meeting.
Barington says Chico's has failed to create meaningful long-term value for stockholders and urged new CEO Shelley Broader to make deeper cuts to marketing and overhead expenses than she already has.

In particular, the nomination of Bonnie Brooks for a seat on the company's board is contentious because she's vice chairwoman of Hudson's Bay. Barington argues Brooks has a conflict of interest because it considers Hudson's Bay a Chico's competitor.

Chico's rebuts Barington's assertion. “Neither Hudson's Bay Co. nor any of the department stores within its portfolio, including Saks Fifth Avenue and Lord and Taylor USA, are significant competitors to Chico's FAS or any of its brands,” Chico's says in a statement. “The company's 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 countered: “We believe it is extremely disingenuous for the company to imply that Ms. Brooks would not have a conflict of interest if she served on the Chico's board.
Hudson's Bay Co.'s department stores — including Saks Fifth Avenue and Lord and Taylor — directly compete with Chico's three brands in virtually every product category. The company's estimate of the apparel spend of its customers who have elected to shop at Chico's rather than one of these two department store chains, even if accurate, is irrelevant. It is like Coke saying that Pepsi is not a competitor because based on its data so few Coke customers drink Pepsi.”