Charming Shoppes CHRS (NASDAQ), the embattled wo
men's retailer, announced the immediate resignation of its CEO, Dorrit Bern. Bern, who originally came to the company back in 1995 as president, CEO and vice chair of the board, has been under growing pressure from activist investors unhappy with management and the company's overall performance. While activist shareholders (Myca Partners and Crescendo Partners) have been rightfully concerned with the company's performance over the last year, Bern was instrumental in growing the firm from the time she first arrived. According to the company's website, under her leadership corporate revenues increased from $1 billion to $3 billion by 2006. According to the company's press release,
men's retailer, announced the immediate resignation of its CEO, Dorrit Bern. Bern, who originally came to the company back in 1995 as president, CEO and vice chair of the board, has been under growing pressure from activist investors unhappy with management and the company's overall performance. While activist shareholders (Myca Partners and Crescendo Partners) have been rightfully concerned with the company's performance over the last year, Bern was instrumental in growing the firm from the time she first arrived. According to the company's website, under her leadership corporate revenues increased from $1 billion to $3 billion by 2006. According to the company's press release,"Dorrit and the Board agreed that now is the appropriate time for a change in leadership of the Company. Her leadership resulted in the repositioning of Charming Shoppes as a multi-brand, multi-channel specialty apparel retailer, and the nation's leader in women's specialty plus apparel."
Growth, however, is now at a standstill and the firm has been facing increasing problems. According to Women's Wear Daily,
The retailer's stock fell 60 percent last year.
Bern has initiated a series of changes over the last year and a half including reductions in staff and management and better inventory control. While the changes were needed they have not been viewed by many analysts and shareholders as sufficient. While earnings have continued to remain anemic Charming Shoppes took forceful steps to fight off attempts by activist shareholders to make changes on the company's board and management. The company even initated a lawsuit but in the end activist shareholders seemed to have gotten the upper hand. After back and forth negotiations the company caved and allowed two activist sharehodler candidates to be elected to the board.
As part of the company's management change announcement, the firm made recently appointed Chairman, Alan Rosskamm, the interim CEO. Rosskamm was previously the Chairman and CEO of Jo-Ann Stores and has been a long time member of Charming Shoppes' board. Charming Shoppes has a great deal more to do to help solidify its weakening retail position.
Keep a close eye on who the company comes up with to permanenetly replace Bern and what role the key activist shareholderes play going forward. There are likely more changes to come.
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