Charming Shoppes looks to sell some assets

Posted Apr 29th 2008 1:00PM by Zac Bissonnette (RSS feed)
Filed under: Activist investing

In a sign that the current leadership at Charming Shoppes (NASDAQ: CHRS) might be interested in a turnaround instead of just suing shareholders, the company has hired Banc of America Securities and Lehman Brothers to help explore strategic alternatives for its non-core catalog titles. Charming Shoppes' major brands include Lane Bryant and Fashion Bug, but it also owns catalog brands Old Pueblo Traders, Bedford Fair, Willow Ridge, Lew Magram, Brownstone Studio, Intimate Appeal, Monterey Bay Clothing Co., Coward Shoe and Figi's.

In a press release, chairman, president and CEO Dorrit J. Bern said that "We have received a number of inquiries from qualified third parties and are evaluating several alternatives for our non-core apparel catalog titles which would allow us to focus exclusively on and accelerate the growth of our core plus apparel businesses, with the goal of enhancing shareholder value ... Our ongoing review of our operations and strategic assets has determined that we are able to commit to further reduce our budgeted capital expenditures by an additional $20 million during the current fiscal year ... This reduction is in addition to our previously announced reduction of $43 million for fiscal year 2009. In total, this $63 million reduction in planned capital spending for the current year now represents a decrease of nearly 50% compared to our fiscal year 2008 capital expenditures."

The announcement sent the stock up 6% but it probably won't be enough to keep the current directors in place. Myca Partners and Crescendo Partners, the major shareholders behind the Charming Shoppes Full Value Committee, aren't buying it. In a press release, the committee said that "The Company is finally acknowledging the need to sell non-core assets by exploring strategic alternatives for its 8 non-core misses apparel catalogs. We have been urging the Board to explore non-core asset sales all along. We are concerned, however, that the Company may not be conducting a full competitive process to maximize the value of these assets and may instead, urgently sell these assets before the annual meeting at too low a price just to be able to say that they have taken some actions."

That sounds about right, and the dissident shareholders have garnered the support of leading proxy advisory firms.

If you're interested in learning more about activist investing -- and bad management -- take a look at the Charming Shoppe's Full Value Committee's recent press releases. Even if you're not a shareholder, this is an interesting and informative story to follow.

Tags: Charming Shoppes, CharmingShoppes, CHRS, Crescendo Partners, Myca Partners, MycaPartners

Reader Comments (Page 1 of 1)

4-30-2008 @ 4:49AM

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