NEW YORK, May 17, 2017 /PRNewswire/ -- Macellum SPV
III, LP, Macellum Advisors GP, LLC, and certain of their affiliates
(collectively, "Macellum"), a large stockholder of Citi Trends,
Inc. (NASDAQ: CTRN) (the "Company" or "Citi Trends") that has
nominated two highly qualified candidates for election at the
Company's upcoming annual meeting of stockholders, announced today
that Glass Lewis & Co. ("Glass Lewis") and Egan-Jones, two
leading independent proxy voting advisory firms, have recommended
that stockholders vote on Macellum's WHITE proxy card
FOR the election of BOTH Macellum nominees,
Jonathan Duskin and Paul Metcalf, at the upcoming annual meeting of
stockholders.
In its May 16th
report1, Glass Lewis concluded:
"We believe the board could
benefit from additional fresh perspective and oversight,
particularly as it prepares to select the next CEO to lead to the
Company."
Glass Lewis agreed with Macellum that Chairman Anderson
likely bears responsibility for the Company's poor historical
performance:
"Management Nominees Anderson
and Hyatt have served on the board for 16 years and 11 years,
respectively, and we expect shareholders may wish to hold these two
long-serving directors responsible for the Company's poor TSR
performance and operating challenges under their leadership.
Management Nominee Anderson has intermittently served as executive
chairman, non-executive chairman and CEO of the Company over the
last 16 years and likely bears considerable responsibility for the
Company's poor performance under his tenure, in our view."
Macellum believes stockholders must vote for BOTH Mr. Metcalf
and Mr. Duskin to effectuate meaningful change
Macellum believes the election of both Mr. Metcalf and Mr.
Duskin to the Board represents the best path for creating value at
the Company. Mr. Metcalf is an exceptionally well-qualified
candidate. He has a long career of success in off-price
retailing. He was hired by Bain Capital to be the Chief
Merchant at Burlington Stores, Inc. at a time when Burlington was struggling. As Chief
Merchant at Burlington, Mr.
Metcalf was responsible for turning the merchandise department
around and played a key role in driving EBITDA from $311 million to $445 million. Burlington's stock price was over $60 per share when Mr. Metcalf resigned (up from
$16 at the IPO). Mr. Metcalf
had similar success as a Director of private, off-price retailer
Gabriel Brothers. After a
successful turnaround, Gabriel
Brothers was recently sold at 8x EBITDA to Warburg
Pincus.
In recommending that stockholders vote for both Macellum's
highly qualified nominees, and contrary to Citi Trends' portrayal
of Macellum's nominees, Glass Lewis recognized the significant
relevant experience and qualifications of Jonathan Duskin and Paul
Metcalf:
"Dissident Nominee Jonathan
Duskin is CEO of Macellum and would serve as a direct
representative of Macellum if elected to the board. Mr. Duskin has
decades of investment experience in the retail and consumer sector
and relevant public company board experience in the specialty
retail industry. Dissident Nominee Metcalf has relevant executive
and merchandising experience in the off-price retailing industry
that could likely be of value to the board, in our view."
The current Board should not be allowed to select a permanent
CEO
Given their disappointing track record of recruiting and
retaining a qualified CEO, we believe it would be a grave mistake
for stockholders to give the Board an opportunity to hire the next
CEO. We are extremely concerned that leaving Mr. Anderson at
the helm will do just that. Further, without meaningful
change on the Board, we believe Citi Trends will struggle to
recruit high caliber candidates. We believe high quality
executives will be skeptical of the opportunity knowing that the
former CEO, Jason Mazzola, left the
Company for a substantially lesser role.
Stockholders should be concerned, as we are, that Citi Trends
may seek to promote acting CEO, CFO and COO Bruce Smith to the role of permanent CEO.
He has been with the Company for 10 years which saw extended
periods of deteriorating operating results and value
destruction. He must share in the blame as well and
stockholders should not allow him to be rewarded with a promotion
to permanent CEO. As COO, we would expect that IT reported
directly to Mr. Smith and as CFO capital allocation would have been
a primary responsibility. Mr. Smith must be held accountable
for the deterioration in RIOC and ROE and for the Company's
antiquated systems. We would not be surprised if this finance
heavy Board felt comfortable promoting Mr. Smith to permanent
CEO. Do not give Mr. Anderson an opportunity to make the
mistake again of promoting an unqualified internal executive.
Vote the WHITE Card for Both Macellum Nominees
We leave stockholders to consider one issue central to this
election contest. If Citi Trends is an off-price retailer, it
failed to take advantage of the greatest segment of growth in all
of apparel retailing. If the Board changed its strategy to be
a vertically integrated, private label retailer, then we believe
this was a poor decision. Why would the Company migrate its
strategy away from the most successful category of retailing,
arguably the ONLY segment of apparel retail that is experiencing
growth to pursue one of the most difficult segments? Either
way, we believe the Board needs to be refreshed and Mr. Anderson
needs to be replaced. As Glass Lewis concluded, the election
of the Macellum nominees would make the Board well positioned to
represent the interests of all stockholders:
"If elected, the Dissident
Nominees would hold two out of six board seats, representing a
minority of the board, and would not be in position to enact policy
without the support of additional directors. We believe a board
constructed in this manner would be well positioned to represent
the interests of all shareholders."
VOTE THE WHITE PROXY CARD TODAY TO ELECT BOTH
OF OUR HIGHLY-QUALIFIED NOMINEES — JONATHAN DUSKIN AND PAUL METCALF
— TO THE BOARD AT THE COMPANY'S UPCOMING ANNUAL MEETING
If you have already voted Citi Trends' blue proxy card, a later
dated WHITE proxy card will revoke your previously cast
vote.
Investor Contact:
Jonathan Duskin
Macellum Capital Management, LLC
(212)-956-3008
Jduskin@macellumcap.com
John Ferguson
Saratoga Proxy Consulting LLC
(212) 257-1311 or (888) 368-0379
Info@saratogaproxy.com
1 Permission to quote from the Glass Lewis report in
this press release was neither sought nor obtained.
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SOURCE Macellum Capital Management, LLC