defa14aapril172008release.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934 (AMENDMENT NO. )
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Filed
by the Registrant
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[X]
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Filed
by a Party other than Registrant
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Check the
appropriate box:
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Preliminary
Proxy Statement.
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Confidential, For Use of the
Commission Only (as permitted by Rule
14a-6(e)(2)).
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Definitive
Proxy Statement.
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[X]
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Definitive
Additional Materials.
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Soliciting
Material Pursuant to Rule 14a-12.
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CHARMING SHOPPES,
INC.
(Name
of registration as specified in its charter)
Payment
of Filing Fee (Check the appropriate box)
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[X]
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i) (1) and
0-11.
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unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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maximum aggregate value of transaction:
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Total
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule and the
date of its filing.
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Amount
Previously Paid:
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PROXY
COMMUNICATION STATEMENT:
On April
2, 2008, Charming Shoppes, Inc. filed a definitive proxy statement with the
Securities and Exchange Commission (the “SEC”) in connection with the 2008
Annual Meeting of Shareholders of Charming Shoppes, Inc., and began the process
of mailing the definitive proxy statement and a GOLD proxy card to shareholders.
Charming Shoppes’ shareholders are strongly advised to read Charming
Shoppes’ proxy statement as it contains important information.
Shareholders may obtain an additional copy of Charming Shoppes’ definitive proxy
statement and any other documents filed by Charming Shoppes with the SEC for
free at the SEC’s website at http://www.sec.gov. Copies of the definitive proxy
statement are available for free at Charming Shoppes’ website at http://www.charmingshoppes.com.
In addition, copies of Charming Shoppes’ proxy materials may be requested at no
charge by contacting MacKenzie Partners, Inc. at 1-800-322-2885 or via email at
charming@mackenziepartners.com.
Detailed information regarding the names, affiliations and interests of
individuals who are participants in the solicitation of proxies of Charming
Shoppes’ shareholders is available in Charming Shoppes’ definitive proxy
statement filed with SEC on April 2, 2008.
FOR IMMEDIATE
RELEASE
CHARMING SHOPPES MAILS
LETTER TO SHAREHOLDERS
Urges
Shareholders to Support Company’s Board of Directors and
VOTE
the GOLD Proxy Card Today
BENSALEM,
Pa., April 17, 2008-- Charming Shoppes, Inc. (Nasdaq: CHRS) a leading
multi-brand, multi-channel specialty apparel retailer specializing in women's
plus-size apparel, today announced that it has mailed a letter to its
shareholders from Dorrit J. Bern, Charming Shoppes’ Chairman, President and
Chief Executive Officer, and Katherine M. Hudson, Lead Independent Director, in
connection with the Company’s Annual Meeting of Shareholders scheduled for
Thursday, May 8, 2008. Charming Shoppes strongly urges shareholders
to re-elect its experienced and highly-qualified directors – Dorrit J. Bern,
Alan Rosskamm and M. Jeannine Strandjord – by voting the GOLD proxy card by
telephone, Internet or mail today.
In the
letter, Charming Shoppes noted, among other things:
Charming
Shoppes’ Board has a proven record of managing successfully through challenging
retail and economic environments by making tough, but necessary, decisions to
position the Company for sustainable and profitable growth.
In the
current environment, Charming Shoppes’ Board and management team are focused on
maintaining a solid balance sheet and optimizing cash flow generation to ensure
the Company’s continued financial strength and long-term
competitiveness.
Crescendo
and Myca have offered no new ideas to benefit the Company and its shareholders
and are only advocating a short-term financial reengineering scheme for Charming
Shoppes, including sales of Company assets and a diversion of cash flow
necessary to run its business, all with the goal of a one-time share
buyback.
Charming
Shoppes strongly urges shareholders to reject the three individuals nominated by
the dissident shareholder group in opposition to Charming Shoppes’ incumbent
directors.
The full
text of Charming Shoppes’ letter follows:
WHO DO
YOU WANT LEADING CHARMING SHOPPES IN TODAY’S
CHALLENGING
RETAIL AND ECONOMIC ENVIRONMENT?
SEASONED
DIRECTORS AND RETAIL APPAREL EXECUTIVES
OR
OPPORTUNISTIC
HEDGE FUND MANAGERS?
WE
BELIEVE THE ANSWER IS CLEAR —
SUPPORT
CHARMING SHOPPES’ BOARD OF DIRECTORS —
VOTE THE
GOLD PROXY CARD TODAY
April 17,
2008
Dear
Fellow Shareholder:
By now
you may have received a letter from a dissident shareholder group led by two
small New York City-based hedge funds, Crescendo Partners and Myca Partners,
operating under the name of “The Charming Shoppes Full Value Committee.” This
group has initiated a disruptive proxy contest in an effort to install three of
its hand-picked candidates, including two hedge fund representatives, onto your
Board.
We urge
you to reject the dissident group’s nominees and re-elect Charming Shoppes’
experienced and highly-qualified directors — Dorrit J. Bern, your Chairman and
CEO, Alan Rosskamm and M. Jeannine Strandjord — by signing, dating and returning
Charming Shoppes’ enclosed GOLD proxy card today.
YOUR
BOARD AND MANAGEMENT TEAM KNOW HOW TO MANAGE SUCCESSFULLY THROUGH CHALLENGING
RETAIL AND ECONOMIC ENVIRONMENTS
Your
Board and management team have a proven record of navigating through difficult
economic environments by making tough, but necessary, decisions to position the
Company for sustainable and profitable growth with the goal of enhancing value
for all shareholders.
During
the last economic downturn in 2002 and 2003, your Board and management team
implemented a series of initiatives to control inventory, reduce overhead costs,
refocus the growth of core brands through merchandising and store execution, and
further developed Lane Bryant — Charming Shoppes’ primary growth vehicle today,
which had been acquired in 2001. Through these efforts, from 2003 to 2006,
Charming Shoppes successfully increased top-line growth, improved operating
margins from 3.2% to 5.6%, and grew EBITDA margins from 7.4% to 8.6%. In the
three fiscal years following the 2002-2003 downturn, the Company’s share price
appreciated 275%, outpacing both our peers (+231%) and the S&P
500 Index (+50%). In the five fiscal years following the downturn, Charming
Shoppes’ stock price increased 105% — outperforming both its peers (+43%) and
the S&P 500 Index (+63%).
By
positioning Charming Shoppes as a strong, healthy competitor with a leading
market position, your Board and management team have demonstrated they are
best-suited to lead the Company in the current environment and enhance
shareholder value in the future.
YOUR
BOARD AND MANAGEMENT TEAM HAVE TAKEN
DECISIVE
ACTIONS AND ARE COMMITTED TO DRIVING SUSTAINABLE AND PROFITABLE
GROWTH
Over the
last year, Charming Shoppes has streamlined business operations, reduced
SG&A expenses and capital expenditures, and improved cash flow. We
have:
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Consolidated
retail operating and marketing functions and eliminated approximately 200
full-time corporate and field management
positions;
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Commenced
a process to close approximately 150 underperforming stores this year,
including about 100 stores at the Fashion Bug chain, as well as the Petite
Sophisticate retail concept;
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Improved
inventory management and implemented aggressive promotional activities,
which resulted in a 19% reduction in same store inventories for the fiscal
year ended February 2, 2008; and
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Limited
the number of planned store openings, which resulted in a $40 million, or
30%, reduction in the Company’s 2008 capital budget from 2007
levels.
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Your
Board unanimously believes that continued execution of Charming Shoppes’ focused
multi-brand, multi-channel strategy is the best course of action to strengthen
our leadership position in our specialty retail markets, and thereby enhance
long-term shareholder value. We continue to:
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Focus
on our core brands — Lane Bryant, Catherines and Fashion Bug — by
improving the merchandise selection through a variety of new initiatives
such as Right Fit by Lane BryantTM
and Cacique® intimate apparel, Right Fit by CatherinesTM,
and securing the exclusive use of the Gitano® brand name for sportswear
and footwear at Fashion Bug;
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Shift
sales and profit mix to higher operating margin brands and channels;
and
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Utilize
our newly launched Lane Bryant catalog business and e-commerce platform to
better serve our loyal and growing customer
base.
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In the
current environment, your Board and management team are focused on maintaining a
solid balance sheet and optimizing cash flow generation, to ensure the Company’s
continued financial strength and long-term competitiveness:
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We
are operating the business with a focus on cash flow generation in order
to maintain significant financial flexibility and appropriate
liquidity;
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We
continue to maintain an optimal and cost effective capital structure. We
refinanced our convertible notes with more cost effective, longer term
convertible debt and decreased our annual interest expense by over $4
million. This has provided us with new low-cost 7-year financing that
eliminates any short-term refinancing needs and allows us to focus on
operating and business initiatives without any significant financing
limitations; and
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Over
the last 12 months, we have returned significant capital to our
shareholders through the repurchase of $253 million of common
stock.
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Ask
yourself, in today’s difficult retail and economic environment, who do you want
leading your Company — an experienced and highly-qualified Board and management
team with a proven track record of taking decisive actions and managing through
challenging environments, or opportunistic hedge fund managers who have no large
public company retail experience and limited strategic, operational and
management experience?
CRESCENDO
AND MYCA OFFER NO NEW IDEAS
FOR
CHARMING SHOPPES
We
believe the dissident hedge fund group is merely attempting to turn a quick
profit on its Charming Shoppes stock, most of which was bought last December at
prices depressed by the current economic environment.
To date,
the dissident group has not articulated any new ideas to navigate your Company
through the current economic environment. Instead, they have put forth stale
rhetoric taken directly out of the activist hedge fund playbook from the past.
The Crescendo and Myca hedge funds — as they have done at other publicly-traded
companies — are advocating a short-term financial reengineering scheme at
Charming Shoppes, including sales of Company assets and the diversion of cash
flow necessary to run the business, which we believe would present significant
risk to Charming Shoppes, all with the goal of having a one-time share
buyback.
We
believe these highly risky propositions are imprudent, especially in light of
the current environment, and, in our opinion, reflect the dissident group’s lack
of understanding of Charming Shoppes, the retail industry and the credit markets
today.
We
strongly believe the dissident group’s director nominees, if elected, will seek
to advance the hedge funds’ risky short-term financial reengineering scheme and
be highly disruptive to the efforts of your Board and management team to create
long-term shareholder value.
PROTECT
THE VALUE OF YOUR INVESTMENT
—
RE-ELECT YOUR DIRECTORS —
VOTE THE
GOLD PROXY CARD TODAY
Your vote
is important, no matter how many or how few shares you own. To vote your shares,
please sign, date and return the enclosed GOLD proxy card by mailing it in the
enclosed pre-addressed, stamped envelope. You may also vote by phone or Internet
by following the instructions on the enclosed proxy card. If you have any
questions or need any assistance voting your shares, please contact MacKenzie
Partners, Inc., which is assisting the Company in this matter, toll-free at
(800) 322-2885 or charming@mackenziepartners.com.
On behalf
of the Board of Directors, we thank you for your continued support of Charming
Shoppes.
Sincerely,
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/S/ DORRIT J.
BERN
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/S/ KATHERINE M.
HUDSON
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Dorrit
J. Bern
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Katherine
M. Hudson
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Chairman,
Chief Executive Officer and President
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Lead
Independent Director
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At
February 2, 2008, Charming Shoppes, Inc. operated 2,409 retail stores in 48
states under the names LANE BRYANT(R), FASHION BUG(R), FASHION BUG PLUS(R),
CATHERINES PLUS SIZES(R), LANE BRYANT OUTLET(R), PETITE SOPHISTICATE(R) and
PETITE SOPHISTICATE OUTLET(R). Apparel, accessories, footwear and gift catalogs,
including the following titles, are operated by Charming Shoppes' Crosstown
Traders: Lane Bryant Woman, Old Pueblo Traders, Bedford Fair, Willow Ridge, Lew
Magram, Brownstone Studio, Intimate Appeal, Monterey Bay Clothing Company,
Coward Shoe and Figi's. Please visit http://www.charmingshoppes.com for
additional information about Charming Shoppes, Inc.
FORWARD-LOOKING
LANGUAGE
This
press release contains certain forward-looking statements concerning the
Company’s operations, performance, and financial condition. Such forward-looking
statements are subject to various risks and uncertainties that could cause
actual results to differ materially from those indicated. Such risks and
uncertainties may include, but are not limited to: the failure to effectively
implement the Company’s plans for consolidation of the Catherines Plus Sizes
brand, a new organizational structure and enhancements in the Company’s
merchandise and marketing, the failure to generate a positive response to the
Company’s new Lane Bryant catalog and the Lane Bryant credit card program, the
failure to implement the Company’s business plan for increased profitability and
growth in the Company’s retail stores and direct-to-consumer segments, the
failure to successfully implement the Company’s expansion of Cacique through new
store formats, the failure of changes in management to achieve improvement in
the Company’s competitive position, the failure to successfully implement the
Company’s integration of operations of, and the business plan for, Crosstown
Traders, Inc., adverse changes in costs vital to catalog operations, such as
postage, paper and acquisition of prospects, declining response rates to catalog
offerings, failure to maintain efficient and uninterrupted order-taking and
fulfillment in our direct-to-consumer business, changes in or miscalculation of
fashion trends, extreme or unseasonable weather conditions, economic downturns,
escalation of energy costs, a weakness in overall consumer demand, failure to
find suitable store locations, increases in wage rates, the ability to hire and
train associates, trade and security restrictions and political or financial
instability in countries where goods are manufactured, the interruption of
merchandise flow from the Company’s centralized distribution facilities,
competitive pressures, and the adverse effects of natural disasters, war, acts
of terrorism or threats of either, or other armed conflict, on the United States
and international economies. These, and other risks and uncertainties, are
detailed in the Company’s filings with the Securities and Exchange Commission,
including the Company’s Annual Report on Form 10-K for the fiscal year ended
February 2, 2008 and other Company filings with the Securities and Exchange
Commission. Charming Shoppes assumes no duty to update or revise its
forward-looking statements even if experience or future changes make it clear
that any projected results expressed or implied therein will not be
realized.
ADDITIONAL
INFORMATION
On April
2, 2008, Charming Shoppes, Inc. filed a definitive proxy statement with the
Securities and Exchange Commission (the “SEC”) in connection with the 2008
Annual Meeting of Shareholders of Charming Shoppes, Inc., and began the process
of mailing the definitive proxy statement and a GOLD proxy card to shareholders.
Charming Shoppes’ shareholders are strongly advised to read Charming Shoppes’
proxy statement as it contains important information. Shareholders may obtain an
additional copy of Charming Shoppes’ definitive proxy statement and any other
documents filed by Charming Shoppes with the SEC for free at the SEC’s website
at http://www.sec.gov. Copies of the definitive proxy statement are available
for free at Charming Shoppes’ website http://www.charmingshoppes.com. In
addition, copies of Charming Shoppes’ proxy materials may be requested at no
charge by contacting MacKenzie Partners, Inc. at 1-800-322-2885 or via email at
charming@mackenziepartners.com. Detailed information regarding the names,
affiliations and interests of individuals who are participants in the
solicitation of proxies of Charming Shoppes’ shareholders is available in
Charming Shoppes’ definitive proxy statement filed with SEC on April 2,
2008.
CONTACT:
Gayle M.
Coolick
Charming
Shoppes, Inc.
Director
of Investor Relations
(215)
638-6955
Dan Burch
/ Jeanne Carr
MacKenzie
Partners, Inc.
(212)
929-5500
Matthew
Sherman / Andrea Priest
Joele
Frank, Wilkinson Brimmer Katcher
(212)
355-4449