The sandbox fight between Children’s Place and two activist shareholders is heating up in advance of the company’s annual meeting on May 22, when new directors will be elected.
And the ongoing battle likely pushed management into hiring Goldman Sachs to explore a sale, according to sources close to the situation.
Children’s Place quietly disclosed the Goldman hire in an SEC filing on April 13, when it announced that it was rejecting the activist investors’ board nominations of Robert Mettler, a veteran retail executive, and Seth Johnson.
To add more firepower, sources say Jack Levy, co-chairman of Goldman’s global merger business, has been retained.
The company declined to comment on what it described as “market rumors.”
The activists, Macellum Advisors and Barington Capital, which hold a 2.1 percent stake in the retailer, are waging a proxy battle, agitating for two new directors who they say would improve the company’s poor performance and rein in its chief executive officer, Jane Elfers.
They charge Elfers is overpaid and that the board does little to address the company’s weak stock performance.
Earlier this week, the activists fired off a letter to shareholders pointing out that Children’s Place revised a list of companies it compares itself to, deleting six strong retail companies — including Kate Spade, Men’s Wearhouse and Finish Line — and added struggling companies The Gap and Abercrombie & Fitch.
The investors accused Children’s Place of “a seemingly deliberate attempt to mislead shareholders.”
Not so, said the company, “They’re distorting the facts. We haven’t changed our peer group. We’ve outperformed our closest competitors since Jane Elfers was announced CEO” five years ago.
In a 38-page defense white paper released May 1, Children’s Place said its performance is better than children’s apparel companies Gymboree, OshKosh and Justice, pointing to a 114 percent increase in the stock price during Elfer’s tenure.
The company’s shares closed at $62.24, down 0.64 percent, in Tuesday’s trading.