At Early Stages of Proxy Fight, Charlotte Russe Announces Sale
Juniors retailer Charlotte Russe Holding Inc. announced it was for sale on the evening of March 12. The announcement is the latest round of the fight for control of the San Diegonot;–based retailer.
Charlotte Russe’s board of directors instructed its financial advisor, Cowen and Co. LLC, on March 12 to initiate a sale process. Since Jan. 21, the company has been exploring alternatives, including a sale to boost its sagging fortunes. Also on Jan. 21, the retailer announced results for its first fiscal quarter of its new year. Its same-store sales declined 9.1 percent. Its net sales were $240.7 million.
The March 12 announcement was greeted with a frank preliminary proxy statement from KarpReilly Capital Partners. On March 13, the investment firm accused Charlotte Russe’s board of mishandling company business and recently hiring a team with no experience in the juniors or fast-fashion market. KarpReilly is nominating a slate of three candidates for the company’s board of directors at the retailer’s 2009 annual meeting, scheduled for April 28.
KarpReilly co-founder Allan Karp served on Charlotte Russe’s board of directors from 1996 to 2007. He owns 5.68 percent of the retailer’s shares. A Charlotte Russe representative declined to comment on Karp’s filing.
A sale might be possible even during a weak economic period, according to Liz Pierce, an equity analyst at Newport Beach, Calif.–based Roth Capital Partners. “There are always people interested when they perceive there is value to be had,” she said.
KarpReilly and H.I.G. Capital LLC bid in November to purchase 100 percent of company shares for $9 to $9.50 per share in an all-cash, all-equity transaction. The retailer rejected the bid.
In November, Charlotte Russe’s board of directors hired former Mervyns President John D. Goodman as the new Charlotte Russe chief executive. According to a company statement, Goodman and the new management team were given the mission to redefine the store’s image and identify what the Charlotte Russe customer needs. —Andrew Asch
