Charlotte Russe Proxy Fight Ends
A fierce fight for control of juniors retailer Charlotte Russe Holding Inc. came to an end April 16, less than two weeks before a scheduled showdown at the annual shareholders meeting on April 28 in San Diego.
Over the past couple of months, the retailer’s board of directors and investment group KarpReilly LLC traded barbed comments as they vied for support from Charlotte Russe’s stockholders. But it was announced on April 16 that two leading independent proxy advisory firms, RiskMetrics Group and Glass Lewis & Co., recommended shareholders support the slate-backed retailer’s board of directors. KarpReilly then chose to withdraw its slate of three candidates from the upcoming election.
KarpReilly’s decision might clear the air for the once-embattled Charlotte Russe board, said Liz Pierce, an analyst for Newport Beach, Calif.–based Roth Capital Partners. “It’s a good move. The team will be able to focus on improving their business,” she said. The news did not change the board’s intention to sell Charlotte Russe. On March 12, the board retained financial firm Cowen and Co. LLC to initiate a sale process.
The board also reported some good financial news on April 16 with the release of the company’s second-quarter results. Net sales increased 3.3 percent to $191.2 million, compared with $185.1 million in the same time in the previous year. The company also reported results for the six months of business that ended on March 28. Same-store sales declined 8.6 percent during that period. For its third quarter, the retailer forecast a positive low single-digit increase or a small decline for its same-store sales.
Charlotte Russe also stated its finances were in good shape because it has $51 million in cash and no debt. Charlotte Russe Chief Executive John Goodman said business for the retailer would get better. “We expect to build momentum in the coming quarters and look forward to generating further improvement during the remainder of the year,” he said in a statement. —Andrew Asch
