As posted by: Wall Street JournalChico's FAS Inc. announced Chairman and Chief Executive Scott Edmonds stepped down after months of pressure from an activist investor to resign.
The women's apparel retailer said that after months of discussing succession plans, Mr. Edmonds, 51 years old, told the board on Wednesday he was retiring. David Dyer, a 59-year-old apparel-industry veteran and Chico's director since 2007, was named chief executive of the Fort Myers, Fla., company. Ross Roeder, the board's 70-year-old lead director, was named chairman.
The announcement came as Spotlight Capital Management LLC, a New York hedge fund that has been pressing the board to name a new CEO since last March, was preparing to nominate its own slate of directors. Spotlight blames Mr. Edmonds for the retailer's missteps, including turning off Chico's core baby boomer customers by trying to reach younger women, not investing enough in e-commerce and locating new stores too close to existing ones, among other things. Mr. Edmonds wasn't available for comment. Chico's said the allegations "lack merit and substance." Chico's stores may offer Organic Baby Clothing, Kids Shoes, Natural Baby Clothes, and Designer Women's Clothes.
"This is good news for Chico's and its long-suffering shareholders," said Gregory Taxin, managing director of Spotlight, who wouldn't disclose Spotlight's stake.
In a Securities and Exchange Commission filing Thursday afternoon, Chico's disclosed that Mr. Edmonds's departure would be treated as a "termination by employer without good cause," meaning Mr. Edmonds will receive separation pay of nearly $4.4 million plus a prorated portion of any bonus he would have received for the fiscal year ending Jan. 31, among other benefits.
After years of rapid growth fueled by its success at selling comfortable, colorful clothes to baby-boomer women, Chico's began slipping in 2006. Growth slowed at its namesake chain, and it struggled to develop newer brands including the White House/Black Market chain aimed at younger women and Soma Intimates apparel stores. On Thursday, shares of Chico's rose 30 cents to $4.23 in 4 p.m. New York Stock Exchange composite trading.
In an interview, Mr. Dyer said he plans to focus on efficiency, continue efforts to improve business at the Chico's chain and raise the profile of the White House/Black Market chain.
He also said he would invest more in direct marketing and e-commerce.
The former Tommy Hilfiger and Lands' End executive said, "we think we can grow the business to increase market share." The company has no long-term debt and more than $250 million in cash and marketable securities.
On Thursday, Chico's also said December sales at stores open at least a year fell 12.4%, in line with analysts' expectations, and it expects "lower gross margins" in the fourth quarter, due to the sales drop, the promotional landscape and its intent to end the quarter with lower inventory levels.
In an interview, Mr. Roeder said he and Mr. Edmonds, who became chief executive in 2003 and chairman in 2007, had been discussing succession plans for at least a year.
He said Mr. Edmonds a noted keynote speaker decided to leave as the economic situation grew worse.
