FORT MYERS, Fla., June 6, 2016 /PRNewswire/ -- Chico's FAS,
Inc. (NYSE:CHS) today announced that it has filed definitive proxy
materials with the Securities and Exchange Commission ("SEC") in
connection with its upcoming Annual Meeting of Shareholders to be
held on July 21, 2016. Shareholders
of record as of May 16, 2016, will be
entitled to vote at the meeting.
In conjunction with the definitive proxy filing, Chico's FAS is
mailing a letter to the Company's shareholders. Highlights from the
letter include:
- Under the direction of a new Chief Executive Officer and
President, Shelley Broader, Chico's
FAS is executing a new strategic plan built around four focus areas
that we believe will usher in a new era of profitable growth and
value creation for Chico's FAS shareholders.
- Just 180 days into Ms. Broader's new role, the Company is
making measurable progress on this plan – with more to come.
- In addition to improving operations and making key new hires,
Chico's FAS is proactively enhancing its governance practices.
- The Company has proposed new world-class leaders to be added to
the Board to ensure Chico's FAS has the most relevant skill sets
and expertise to successfully execute its strategy.
- The Board determined that Barington's nominees lack the
relevant skills and expertise needed to support the progress being
made and the Company's new strategic plan.
Chico's FAS' definitive proxy materials and other materials
regarding the Board of Directors' recommendation for the 2016
Annual Meeting can be found at the investor relations section of
the Company's website at www.chicosfas.com.
The full text of the letter being mailed to shareholders
follows:
VOTE THE ENCLOSED WHITE PROXY CARD
TODAY
"FOR" ALL FOUR OF CHICO'S FAS' HIGHLY QUALIFIED
DIRECTOR NOMINEES
June 6, 2016
Dear Chico's FAS Shareholder:
At Chico's FAS' 2016 Annual Meeting of Shareholders on
July 21, 2016, you will be asked to
make an important decision regarding the composition of the
Company's Board of Directors that we believe will impact the future
of the Company and the value of your investment in Chico's FAS.
Under the direction of our new Chief Executive Officer and
President, Shelley Broader, Chico's
FAS is executing a new strategic plan built around four focus areas
that we believe will usher in a new era of profitable growth and
value creation for Chico's FAS shareholders. We are making
measurable progress on this plan – with more to come.
To support the Company's success and its new operating
priorities, and after an extensive search process, we recently
nominated two new independent directors to stand for election to
your Board: Bonnie Brooks, Vice
Chairman of Hudson's Bay Company,
and Bill Simon, the former President
and Chief Executive Officer of Walmart U.S. Ms. Brooks brings
considerable apparel, merchandising, and turnaround expertise to
Chico's FAS, and Mr. Simon has an impressive track record of
driving cost efficient operations with other leading
retailers. They – along with Ms. Broader, and Janice Fields, an independent director of
Chico's FAS since 2013 and the former President of McDonald's
USA, LLC – will stand for election
at the 2016 Annual Meeting. We believe that, together, these
four candidates – Shelley
Broader, Bonnie Brooks,
Janice Fields and Bill Simon – have superior qualifications to
build the value of your investment.
As you may be aware, Barington Companies Equity Partners, L.P.
("Barington") has indicated it will solicit proxies in opposition
to your Board in order to elect two of its own nominees to the
Chico's FAS Board. Your board has already thoughtfully
reviewed and ultimately rejected Barington's nominees. We
believe that replacing any of the Company's director candidates
with Barington's nominees would deprive the Company of skills and
expertise that would significantly contribute to the progress we
are making.
Your vote is very important. We encourage you to protect
the value of your investment in Chico's FAS by voting online, by
telephone or by signing and dating the enclosed WHITE proxy
card and returning it in the postage-paid envelope provided
TODAY.
POSITIVE CHANGE IS
UNDERWAY AT CHICO'S FAS
- NEW CEO AND
PRESIDENT
- EXECUTING ON
ADDITIONAL OPERATING INITIATIVES
- KEY NEW
HIRES
- ENHANCED
GOVERNANCE PRACTICES
- NEW WORLD-CLASS
BOARD NOMINEES
|
CHICO'S FAS APPOINTED A NEW CHIEF EXECUTIVE OFFICER AND
PRESIDENT WHO IS DRIVING EXECUTION THROUGH FOUR NEW FOCUS
AREAS
Chico's FAS is an industry leader with a strong platform for
growth and value creation. The Company benefits from three
powerful and differentiated brands that serve growing and
attractive consumer segments, one of the most loyal customer bases
in the industry, and leading omni-channel capabilities.
To ensure we fully capitalize on these strengths, six months
ago, the Board brought in Ms. Broader as the Company's new Chief
Executive Officer and President. Ms. Broader has more than 25
years of experience leading premier retail businesses, including
Walmart, Michael's Stores, and several banners within Delhaize
Group. In these roles, she has worked to drive revenue
growth, standardize processes, disciplines and metrics, and better
align store operations and resources with the buying patterns of
the retailers' customer bases – all areas of skills and expertise
that will benefit Chico's FAS.
In February 2016, just three
months into her appointment, Ms. Broader introduced, and the Board
approved, four new focus areas for the organization:
- Evolving the customer experience by better integrating
the digital and physical retail environments, and creating and
leveraging a more agile supply chain;
- Strengthening the position of each brand, including
articulating and executing against a clear role in the marketplace
for each brand and its related merchandise, leveraging the
connection the Company has with its loyal customers, attracting new
customers, and continuing to deliver unparalleled service and
fashion that resonates with our customers;
- Leveraging actionable retail science by using the vast
amounts of customer and operational data available to the Company
to develop algorithms and predictive analytics that enable
real-time decision-making and improve how the Company goes to
market, stocks product, and interacts with customers; and
- Sharpening the Company's financial principles to
optimize the allocation of free cash flow and drive further cost
savings across the Company through the shared service model, the
combination and negotiation of contracts, a more effective use of
marketing dollars and modernizing processes, among other
areas.
THE COMPANY'S PROGRESS ON ITS NEW STRATEGIC PLAN IS
BUTTRESSED BY ADDITIONAL OPERATING INITIATIVES AND KEY NEW
HIRES
Beginning with a meeting of the Board on February 23, 2016, Ms. Broader and her team began
studying certain significant initiatives to drive shareholder
value, several of which have already been announced and are well
underway.
On April 25, 2016, we announced a
realignment of the Company's Marketing and Digital Commerce
functions, placing the decision makers directly into the Company's
three brands, Chico's, White House Black Market and Soma.
This realignment enables us to better support the individual
brand's needs and places these important functions closer to our
customers, both of which we believe will help drive traffic.
In addition, this realignment reduces costs and complexity,
resulting in approximately $14
million of expected savings annually.
On May 26, 2016, we announced
three additional initiatives, which together are expected to
result in incremental annual savings of between $50 million and $70 million, while also
fundamentally changing and improving our operating model and the
cadence in which we go to market:
- Supply chain initiative: Through increased product
testing, positioning fabric, optimizing seasonal product flow, and
collaborating more effectively with our vendor partners, we can
better provide the product our customers want, when they want it
and realize expected savings of $30 million
to $40 million annually. These cost savings reflect
reductions in average unit cost and a reduced level of
markdowns.
- Non-merchandise procurement initiative: Given our scale
as a multi-brand operator, we have the opportunity to reduce our
non-merchandise spend by an estimated $10
million to $20 million annually through a formalized process
of strategic supplier rationalization, negotiation and
collaboration.
- Marketing initiative: In addition to the marketing
realignment announced in April, we expect to save at least another
$11 million in annual marketing
expense by better using our unparalleled customer specific data,
incorporating predictive analytics, to determine the most effective
marketing techniques to not only communicate with each customer
personally but also ensure that merchandise pricing and allocation
is optimized no matter where she wants to shop – in our boutiques
or at home.
Notably, these recently-announced initiatives (including the
April marketing realignment) are expected to result in aggregate
costs savings of between $65 million and $85
million annually – equivalent to 2.5% to 3.3% of our
trailing twelve months revenue and reflecting significant progress
towards achieving our 10% operating margin goal. Of this run
rate target, we expect to deliver $15
million of savings by the end of fiscal 2016.
In addition to these operating improvement initiatives, Ms.
Broader has begun to build out her management team with new leaders
who bring skills and expertise to support and accelerate the
progress we are making. She has made new hires in real estate
and construction, planning and allocation, legal and human
resources, including among others:
- Susan Lanigan has been appointed
Executive Vice President and General Counsel. Ms. Lanigan has more
than 15 years of experience in the retail industry, including
serving as Executive Vice President, General Counsel of Dollar
General Corporation, where she was instrumental in the Company's
growth and strategic planning work.
- Kristin Oliver has been
appointed Chief Human Resources Officer. She joins the Company from
Walmart U.S., where she was Executive Vice President of People,
supporting 1.4 million associates. Ms. Oliver has significant
experience implementing world-class talent attraction, development
and retention programs.
Clearly, positive change is underway at Chico's FAS. In
less than six months since Ms. Broader's appointment, she has
launched a new plan and is executing on it with new team members
and multiple initiatives designed to improve how we operate,
enhance our brands' growth and reduce costs by between $65 million and $85 million annually. The
Company's cost review is ongoing, and we expect to identify
additional opportunities for savings and efficiencies.
As we look ahead, we intend to direct capital to further fortify
our brands and drive profitable growth.
Continued capital returns to shareholders through quarterly
dividends and our share repurchase program will also remain a
priority. Since 2010, more than $1.1
billion, or approximately 131% of free cash flow, has been
returned to shareholders through quarterly dividends and share
repurchases. This is significantly higher than the median of our
peers as defined in our 2015 proxy statement, who have returned
only 103% of their free cash flow to shareholders through dividends
and share repurchases over the same time period. Chico's FAS has
returned $398 million, or
approximately 302% of free cash flow, to shareholders through
dividends and share repurchases since the beginning of 2015.[1]
IN ADDITION TO IMPROVING OUR OPERATIONS, WE ARE PROACTIVELY
ENHANCING OUR GOVERNANCE PRACTICES…
As we work to improve our operating performance, the Chico's FAS
Board has also continued to evaluate how best its governance
structure and board composition can drive value.
In this regard, we are pleased to highlight the Board's
recommendation "FOR" a Company-sponsored proposal to declassify the
Board over a three-year period, such that the entire Board would
stand for election at the 2019 Annual Meeting.
We also recently adopted a formal policy limiting directors to
service on four public company boards of directors, in addition to
the Chico's FAS Board.
These governance enhancements further exemplify our desire to
embrace change as we seek to improve all aspects of our business
and organization.
…AND WE HAVE PROPOSED NEW WORLD-CLASS LEADERS TO BE ADDED TO
THE BOARD TO ENSURE WE HAVE THE MOST RELEVANT SKILL SETS AND
EXPERTISE TO SUCCESSFULLY EXECUTE OUR STRATEGY
In February 2016, the Corporate
Governance and Nominating Committee of the Chico's FAS Board began
a search for new independent directors with the assistance of
Herbert Mines Associates. After a thorough review of the
field of candidates, the Chico's FAS Board unanimously determined
that Ms. Brooks and Mr. Simon have the most current and relevant
skill sets and experience to support the Company and the actions
being taken to improve performance and drive value.
- Ms. Brooks brings more than 30 years of global executive
leadership experience in retail and merchandising, including having
led three major international department store turnarounds. After
previously serving as its President and Chief Executive Officer,
she is currently the Vice Chairman of Hudson's Bay Company, which owns and operates
Saks Fifth Avenue, Lord and Taylor (USA), Kaufhof (Germany), and Hudson's Bay
(Canada) department stores.
- Mr. Simon is a seasoned executive with a proven track
record leading large, complex global retailers with best-in-class
cost structures and premier consumer brands. As the former
President and Chief Executive Officer of Walmart U.S., he was
responsible for more than $280
billion in revenue and 1.2 million associates. In addition
to helping implement one of the best supply chains in retail, Mr.
Simon's vision and execution placed Walmart on a path to future
growth with the expansion of small format stores and the
integration of the digital and physical retail experience.
With the election of Ms. Brooks and Mr. Simon, four of the
Company's nine directors, or almost half of the Board, will have
been new to the Board in the past three years.
YOUR BOARD DETERMINED THAT BARINGTON'S NOMINEES LACK THE
SKILLS AND EXPERTISE NEEDED TO SUPPORT OUR PROGRESS
As part of its search, the Board also reviewed five director
candidates that Barington recommended, two of whom Barington has
nominated for election – Jim
Mitarotonda and Janet
Grove. Based on this review and multiple conversations
with the candidates and our Chairman, Chief Executive Officer and
President, and Chair of the Board's Corporate Governance and
Nominating Committee, the Board determined that Barington's
candidates lack the skills and expertise we believe are most
essential for your Company to continue to execute on our strategic
plan:
- With regard to Ms. Grove, in the course of its review,
the Board observed that while Ms. Grove has experience in the
retail industry, this experience is five years dated, which is a
significant gap in an industry as dynamic as retail. Unlike Ms.
Brooks, Ms. Grove also lacks digital and ecommerce expertise, which
are essential components of the Company's strategy, and Ms. Grove
has never served as a public company Chief Executive Officer. In
addition to her significant merchandising and retail expertise, the
Board believes Ms. Brooks' experience and insights as a former
Chief Executive Officer can be particularly helpful to Ms. Broader
in her role as the Company's new Chief Executive Officer.
- With regard to Mr. Mitarotonda, the Board determined
that much of the experience and skills he offers are represented by
current directors and/or Ms. Brooks and Mr. Simon, and that Ms.
Brooks' retail, merchandising, and turnaround skills, and Mr.
Simon's cost cutting and supply chain expertise, together with
their executive leadership experience at other premier retailers,
better address the Company's needs and new operating priorities.
Further, Mr. Mitarotonda's suggested cost reduction actions are
duplicative with efforts already underway, and his traditional
bricks and mortar growth strategy conflicts with the realities of
the current retail environment and the more disciplined growth plan
that the Chico's FAS leadership team is pursuing.
Given these facts and Barington's candidates' lack of relevant
expertise, in our view, the Board's nominees are far better
positioned to enhance the positive change already underway at
Chico's FAS.
PROTECT THE VALUE OF YOUR INVESTMENT –
VOTE THE
WHITE PROXY CARD TODAY
The future of Chico's FAS is bright. We are confident that
the changes we are making and the actions we are taking will lead
to improved performance and enhanced value creation for all Chico's
FAS shareholders.
We urge you to protect the value of your investment in Chico's
FAS by using the enclosed WHITE proxy card to vote
"FOR" each of Chico's FAS' four nominees TODAY by
telephone, by Internet, or by signing and dating the WHITE
proxy card and returning it in the postage-paid envelope
provided.
On behalf of your Board of Directors, we thank you for your
continued support.
Sincerely,
/s/ David. F. Walker
David F. Walker
Chair of the Chico's FAS
Board
If you have any questions or require any assistance with voting
your shares,
please contact the Company's proxy solicitor listed
below:
Innisfree M&A
Incorporated 501 Madison Ave
New York, NY 10022
Toll-free at (877)
825-8971 (from the U.S. or Canada)
or
(412) 232-3651 (from
other locations)
|
ABOUT CHICO'S FAS, INC.
The Company, through its brands – Chico's, White House Black
Market, and Soma is a leading omni-channel specialty retailer of
women's private branded, sophisticated, casual-to-dressy clothing,
intimates, complementary accessories, and other non-clothing
items.
As of April 30, 2016, the Company
operated 1,517 stores in the US and Canada and sold merchandise through franchise
locations in Mexico. The Company's
merchandise is also available at www.chicos.com, www.whbm.com, and
www.soma.com. For more detailed information on Chico's FAS, Inc.,
please go to our corporate website at www.chicosfas.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Certain statements contained herein may contain certain
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which reflect our
current views with respect to certain events that could have an
effect on our future financial performance, including but without
limitation, statements regarding our plans, objectives, and future
success of our store concepts, the implementation of our previously
announced restructuring program, and implementation of our program
to increase the sales volume and profitability of our existing
brands through four previously announced focus areas. These
statements may address items such as future sales, gross margin
expectations, SG&A expectations, operating margin expectations,
planned store openings, closings and expansions, future comparable
sales, inventory levels, and future cash needs. These statements
relate to expectations concerning matters that are not historical
fact and may include the words or phrases such as "expects,"
"believes," "anticipates," "plans," "estimates,"
"approximately," "our planning assumptions," "future outlook," and
similar expressions. Except for historical information, matters
discussed in such oral and written statements are forward-looking
statements. These forward-looking statements are based largely on
information currently available to our management and on our
current expectations, assumptions, plans, estimates, judgments and
projections about our business and our industry, and are subject to
various risks and uncertainties that could cause actual results to
differ materially from historical results or those currently
anticipated. Although we believe our expectations are based on
reasonable estimates and assumptions, they are not guarantees of
performance and there are a number of known and unknown risks,
uncertainties, contingencies, and other factors (many of which are
outside our control) that could cause actual results to differ
materially from those expressed or implied by such forward-looking
statements. Accordingly, there is no assurance that our
expectations will, in fact, occur or that our estimates or
assumptions will be correct, and we caution investors and all
others not to place undue reliance on such forward-looking
statements. Factors that could cause or contribute to such
differences include, but are not limited to, general economic and
business conditions, conditions in the specialty retail industry,
the availability of quality store sites, the ability to
successfully execute our business strategies, the ability to
achieve the results of our restructuring program, the ability to
achieve the results of our four focus areas, the integration of our
new management team, and those described in Item 1A, "Risk Factors"
and in the "Forward-Looking Statements" disclosure in Item 7.
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" of our Form 10-K. There can be no assurance
that the actual future results, performance, or achievements
expressed or implied by such forward-looking statements will occur.
Investors using forward-looking statements are encouraged to review
the Company's latest annual report on Form 10-K, its filings on
Form 10-Q, management's discussion and analysis in the Company's
latest annual report to stockholders, the Company's filings on Form
8-K, and other federal securities law filings for a description of
other important factors that may affect the Company's business,
results of operations and financial condition. All written or oral
forward-looking statements that are made or attributable to us are
expressly qualified in their entirety by this cautionary notice.
The Company does not undertake to publicly update or revise its
forward looking statements even if experience or future changes
make it clear that projected results expressed or implied in such
statements will not be realized.
Additional Information
Chico's FAS, its directors and certain of its executive officers
are participants in the solicitation of proxies from Company
shareholders in connection with the matters to be considered at the
Company's 2016 Annual Meeting. The Company has filed a definitive
proxy statement and WHITE proxy card with the U.S. Securities and
Exchange Commission (the "SEC") in connection with any such
solicitation of proxies from Company shareholders. COMPANY
SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY
STATEMENT AND ACCOMPANYING WHITE PROXY CARD AS THEY CONTAIN
IMPORTANT INFORMATION. Information regarding the identity of the
participants, and their direct or indirect interests, by security
holdings or otherwise, is set forth in the proxy statement and
other materials filed with the SEC. Shareholders will be able
to obtain any proxy statement, any amendments or supplements to the
proxy statement and other documents filed by the Company with the
SEC for no charge at the SEC's website at www.sec.gov. Copies
are also available at no charge at the Company's website at
www.chicosfas.com, by writing to Chico's FAS at 11215 Metro
Parkway, Fort Myers, FL 33966, or
by calling the Company's proxy solicitor, Innisfree, toll-free at
(877) 825-8971.
Contacts:
Investors:
Jennifer Powers
Vice President - Investor
Relations
Chico's FAS, Inc.
(239) 346-4199
Arthur B. Crozier / Jennifer M. Shotwell / Jonathan E. Salzberger
Innisfree M&A Incorporated
(212) 750-5833
Media:
Barrett Golden / Leigh Parrish / Joseph
Sala
Joele Frank, Wilkinson Brimmer
Katcher
(212) 355-4449
[1] Capital returned includes dividends and share repurchases,
which are calculated gross of withholding tax for comparability
with peers; free cash flow is calculated as cash flow from
operations, less capital expenditures.
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SOURCE Chico's FAS, Inc.