The Children’s Place Sends Letter to Shareholders
Highlights Dissidents’ Misleading Claims, Flawed Analysis and Questionable Track Record
Recommends Shareholders Support its Three Highly Qualified, Independent Director Nominees By Voting the WHITE Proxy Card Today
Mr. Matthews continued, “Our transformation continues to deliver tangible progress, as demonstrated by our strong preliminary first quarter results, which included our fourth consecutive quarter of positive comparative store sales and robust margins and EPS. We also remain steadfast in our commitment to the strategic deployment of capital – we continue to make critical investments in our infrastructure and the future of our business and have returned nearly half a billion dollars to shareholders since 2009.
Mr. Matthews added, “Macellum and Barington chose to publicly attack the Company without attempting to engage in any prior substantive discussion regarding their suggestions to improve the Company. The Dissidents’ misleading claims, erratic behavior, questionable track record and outright attacks on our Company and its Board and management team raise serious questions as to whether the Dissident’s nominees would truly serve the best interests of all shareholders. We urge shareholders to carefully review the facts before making their voting decisions.”
The text of the letter follows:
Dear Shareholders,
The 2015 Annual Meeting of Stockholders of The Children’s Place,
Inc. (“The Children’s Place”) is fast approaching. Your vote in support
of the Company’s three nominees at the
The Company’s three experienced and highly qualified,
independent nominees for whom we are asking your support are
Under the oversight of our current Directors, The Children's Place is
outperforming its specialty apparel retailing peers. Our
recently announced excellent first quarter financial results demonstrate
that we are continuing the strong momentum we generated in fiscal 2014
by successfully implementing our transformation plan,
including achieving four consecutive quarters of positive comparative
store sales. Additionally, we have significantly increased our gross
margin, far exceeded the prior year’s EPS, increased our adjusted
guidance for fiscal 2015 and returned another
When
As you likely have seen,
In addition to our strong performance and continuing momentum, we believe there are many reasons to support the Company’s talented and dedicated nominees over those of the Dissidents, including:
- The Dissidents’ claims are not supported by the facts
- The Dissidents’ erratic behavior and poor track record do not warrant your support
- The Dissidents’ nominees would not be additive to the Board of The Children’s Place, and would replace strong directors who have the relevant financial, operational and international experience and skills necessary for a global, omni-channel and specialty apparel retailer
THE DISSIDENTS’ CLAIMS ARE NOT SUPPORTED BY THE FACTS
The Dissidents are seeking to make changes to our Board and disrupt the sweeping transformation that is well underway at The Children’s Place. They have made a number of assertions about the need for change, and they have aggressively criticized the Company’s senior management and Board. However, most, if not all, of the Dissidents’ claims and criticisms are simply untrue or based on faulty premises.
In fact, the Dissidents’ fundamental assertion – that Jane Elfers and the Board inherited a “strong company with good prospects”1 – is a complete mischaracterization of the facts. The facts are that when Jane became CEO in 2010, she found that the Company sorely lacked leadership and management talent, did not have any growth strategy, and relied on antiquated technology and systems. As such, The Children’s Place stock had fallen 58% in the three-years prior to Jane’s arrival. Simply put, this was a company in dire need of a new vision, significant investments and a new management team – a far cry from the “strong company”2 the Dissidents claim our Board “inherited”.3
Similarly, the Dissidents’ claims regarding our stock and operating performance since Jane’s arrival are not supported by an objective analysis of a representative peer group of the Company. They point to one, cherry-picked example company with very different characteristics. The Dissidents completely ignore the performance of the true peers of The Children’s Place or other more representative groups of comparable companies, including Gymboree and Justice.
The Dissidents also have made false and misleading statements with regard to our North American store footprint, claiming that we have accelerated store growth – when in fact we have closed 147 underperforming stores since 2010 (145 of which were opened under a prior management team) and have publicly disclosed plans to close an additional 124 underperforming stores through 2017.
Additionally, their attacks on our corporate governance are ridiculous and unfounded. Directors should be working toward the interests of ALL shareholders, and our corporate governance programs reflect that. We have separate roles for the Chairman of the Board and the CEO, we declassified our Board, and we instituted enhanced stock ownership guidelines for our executives and independent Directors, among other best practices.
In another blatant misrepresentation, the Dissidents sought to disparage
our Board by claiming that the Dissidents “tried to work constructively
with the Company to reconstitute the Board in a manner that would avoid
a proxy contest.”4 This is a bald mischaracterization of the
facts, and it is a blatant attempt to suggest that the Board is
unwilling to engage in constructive discussions with shareholders when
there is ample evidence, recently and going back years, of this Board’s
willingness to engage, listen and make changes based on constructive
feedback from shareholders. The simple fact is that the Dissidents
failed to engage with the Company in any substantive manner prior to the
release of their aggressively worded
We believe that these misrepresentations are indicative of a fundamental lack of understanding of our business and/or simply intended to mislead and misinform shareholders. We strongly urge shareholders to understand the facts and to not make decisions with respect to their investment in The Children’s Place based on the Dissidents’ self-serving and misleading assertions and criticisms.
THE DISSIDENTS’ CAMPAIGN IS DEVOID OF FOCUS AND REFLECTS A LACK
OF UNDERSTANDING OF OUR BUSINESS AND INDUSTRY --
DON’T
REWARD THIS ERRATIC BEHAVIOR AND POOR TRACK RECORD
We believe the Dissidents’ campaign has been disorganized, unconstructive and uninformed from its genesis. Their March 11 letter came one day prior to the Company’s fourth quarter 2014 earnings announcement and conference call, which suggests that the timing of their letter was purely designed to disrupt the Company and distract investors. This is hardly a constructive way to engage.
Their lack of focus is demonstrated by our understanding of initial
conversations between Jonathan Duskin, CEO of Macellum, and James
Mitarotonda, Chairman, President and CEO of Barington, regarding the
Dissidents’ campaign. We understand that Mr. Duskin asked Mr.
Mitarotonda to join Macellum in the campaign against the Company a mere
four days prior to submitting the
Mr. Mitarotonda himself admitted that he had no intention of entering
into this campaign prior to Macellum approaching him. In fact, shortly
after we received the Dissidents’ letter, Mr. Mitarotonda contacted
These deliberate attempts by the Dissidents to disrupt the Company’s earnings process and obfuscate their intentions are not consistent with a good faith desire to engage constructively with the Board.
We urge shareholders to consider whether it is within their best interests to risk interrupting the momentum that is underway at The Children’s Place by replacing our current Directors with individuals nominated by shareholders who have not demonstrated a desire to engage in good faith with the Company.
It is also important to point out that Mr. Duskin, who has been the public face of the Dissidents’ campaign, claims to be a retail expert, yet he has failed to help retail businesses succeed in this space on numerous occasions. His professional affiliations have been fraught with underperformance and abject failures, and he has bounced from job to job in what appear to be peripheral roles.
Mr. Duskin’s track record as a Director on Boards of retail
companies leaves much to be desired. Most notably, Mr.
Duskin was a Board member at the now-bankrupt
THE DISSIDENTS’ TWO NOMINEES WOULD NOT BE
ADDITIVE
TO THE BOARD OF THE CHILDREN’S PLACE
The Company’s Board of Directors carefully evaluated the Dissidents’ nominees, including by conducting background checks and detailed professional reviews, and the full Board concluded that the Dissidents’ nominees would not be additive to the Board. Furthermore, we are concerned with the fact that the Dissidents’ have nominated one director who sits on the Board of a direct competitor, which also raises potential confidentiality, competitive and antitrust concerns. Adding the Dissidents’ nominees – especially given the destructive path chosen by the Dissidents in pursuing this campaign – dramatically increases the potential for disruption to the Board and to the continued execution of a successful transformation plan.
We strongly believe that our three nominees and our five other current Directors collectively have the right combination of expertise, experience and independence to continue the strong progress being made at the Company. The Board believes that both Stan and I bring valuable and directly relevant skills, that we are important contributors as directors and that now is not the right time to alter the Board dynamic and risk interrupting the strong momentum that The Children’s Place has demonstrated.
It is important to remember that the Company’s Board has undergone dramatic changes in recent years. Six of the eight current Board members were added in the last five years, and two of these new independent Directors joined the Board last year. With the exception of Jane, all of our Directors are independent. We believe the Board has an effective and appropriate balance between experience and fresh perspectives to guide and oversee the execution of our transformation strategy.
The current Board is well-aligned on the current business strategy and believes that it would be detrimental to shareholder value to introduce uncertainty about the business strategy and the Board’s commitment to continued execution of the transformation plan which is delivering substantial value to our shareholders.
YOUR VOTE IS IMPORTANT – PLEASE SUBMIT THE WHITE PROXY CARD TODAY
Our upcoming Annual Meeting is an important event in shaping the future of our Company and its Board of Directors. Your Board unanimously recommends that you vote for our three highly qualified Director nominees on the WHITE proxy card.
You may vote by telephone, over the internet, or by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope. We also urge you to discard any blue proxy card sent to you by Macellum, Barington or their affiliates. If you have already submitted a blue proxy card, you can change your vote by signing, dating and returning a WHITE proxy card. Only your latest dated proxy card will be counted.
THE CHILDREN’S PLACE BOARD IS ALIGNED WITH THE INTERESTS OF SHAREHOLDERS
Our Board and management team are very focused on continuing the transformation of The Children’s Place into a leading, global, omni-channel children’s apparel brand. Shares of The Children’s Place are currently trading at an eight-year high, and the continuing execution of our strategic plan has enabled us to outperform our peer group in an intensely competitive children’s retail apparel environment and to return nearly a half billion dollars to shareholders since 2009. Importantly, we believe there is substantial additional upside.
We very much appreciate the confidence you have placed in us, and we remain keenly focused on continuing to deliver substantial shareholder value.
Regards,
Chairman of the Board of Directors
If you have any questions, please call
(212) 929-5500 (Call Collect)
Or
TOLL-FREE (800) 322-2885
About The
The
Forward Looking Statements
This press release may contain certain forward-looking statements
regarding future circumstances. These forward-looking statements are
based upon the Company's current expectations and assumptions and are
subject to various risks and uncertainties that could cause actual
results and performance to differ materially. Some of these risks and
uncertainties are described in the Company's filings with the
Important Additional Information
The Company, its directors and certain of its executive officers may be
deemed to be participants in the solicitation of proxies from Company
shareholders in connection with the matters to be considered at the
Company’s 2015 Annual Meeting. The Company has filed a definitive proxy
statement and form of WHITE proxy card with the
______________________________________________
12 3 “Shareholders For Change at The Children’s Place” Presentation. April, 2015. p. 5.
4 EDGAR Pro. (2015,
5
6 EDGAR Pro. (2012,
Source: The
Investors:
The Children's Place, Inc.
Robert Vill,
201-453-6693
Group Vice President, Finance
or
MacKenzie
Partners
Larry Dennedy, 212-929-5239
or
Media:
Sard
Verbinnen & Co
Paul Caminiti/David Millar/Pamela Blum
212-687-8080