Management Turnover as Change Agent

Thursday, January 8, 2009

Retailers Begin Pressuring CEOs - Chico's FAS

Dismal earnings in the retail sector are beginning to have an impact on executive management.  Today Chico’s FAS CHS (NYSE) announced the retirement of its chairman and CEO Scott Edmonds.  The company also announced that board member David Dyer, who formerly served as the CEO of Tommy Hilfiger and Land’s End, would be the company’s new CEO.Scott Edmonds  Edmonds announced retirement came after the company said its December same-store sales fell 12.4 percent.  Chico’s has been suffering for sometime now.   Back in June of this year Spotlight Capital Management an institutional investor in Chico’s had urged for the Edmonds ouster.  According to a story by Laura Layden in the Naples News Spotlight Capital stated,Chico’s One Year Stock Performance

“Basically, our view is that the performance over the past three years has been very disappointing. We lay blame for that at the feet of the chief executive. We do not believe he has the skills necessary to turn the business around and we are disappointed that the board hasn’t replaced him already,” said Greg Taxin, the fund’s managing director and a Chico’s investor himself.  

… “During his tenure, shareholders have lost $1.6 billion dollars. He’s got one of the worst track records of any CEO of a public company in the United States,” Taxin said.

… Under Edmonds’ watch, the public company’s stock has fallen more than 80 percent from its high and earnings per share have declined for the past three years, he said.

It’s time for the board to bring in a new leader who can turn the business around, Taxin said. 

The continuing slide in the company’s sales and its stock appears to have forced the board’s hand.  Edmonds replacement Dyer certainly has the requisite background and experience.  In both of his previous CEO stints at Lands End and Tommy Hilfiger he played a big role in the sale of those firm’s to larger companies.  It is possible may ultimately have to do the same for Chico’ s.  Keep a close eye on the moves Dyer takes over the next few months to help stabilize the speciality retailer.   

For more:  

NBC News  

Market Report - In play CHS  

New Press   

Reuters (update 1/9)

Forbes (updated 2/6)

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