Children’s Place Target of Class-Action Lawsuit
Secaucus, N.J., Children’s Place Retail Stores Inc. disclosed Monday it is the target of a class-action lawsuit alleging the apparel company misled shareholders.
In a filing with the Securities and Exchange Commission, the retailer said the lawsuit, filed Sept. 21, alleges the company and current and former executives made statements that misrepresented or omitted certain facts about the business. Those misleading statements illegally and artificially inflated the company’s stock price, according to the suit.
The complaint, filed in the U.S. District Court for Southern District of New York, seeks monetary damages and interest, as well as costs involved in the suit.
Last Wednesday, the company asked chief executive Ezra Dabah to resign after an internal probe found he violated internal policies for securities trades. He remains a member of the board and must reimburse the company for out-of-pocket costs related to the investigation. Director Chuck Crovitz was named interim CEO the same day.
The company also stripped former chief creative officer Nina L. Miner of her role as an officer after a probe found she unintentionally violated the company’s code of business conduct related to expense reimbursement practices.
The company said last week it will delay its annual report and other overdue regulatory filings as a result of the leadership change.
Winn-Dixie team honored for turnaround
JACKSONVILLE, Fla. The team that lead Winn-Dixie Stores’ successful turnaround initiative is being honored by the Turnaround Management Association for the best ‘Mega Company Turnaround’ for 2007. Comprised of financial experts from The Blackstone Group, Skadden, Arps, Slate, Meagher & Flom and Smith Hulsey & Busey, the team helped Winn-Dixie regain the market share and profits it started to lose in the mid 1990s and early 2000s to competitors Publix and Wal-Mart.
Winn-Dixie filed for Chapter 11 bankruptcy in early 2005 after reporting year-to-date losses of $552.8 million or $3.93 per share of common stock and a decline of 4.9% in identical-store sales in its second fiscal quarter over the same period in 2004.
Despite the difficulty of achieving a succesful turnaround, Winn-Dixie began its reorganization effort, while still continuing to operate its core business and preserving jobs. According to the Turnaround Management Association, it created new common stock for five classes of unsecured creditors, with recoveries ranging from about 96% to 53%. The company emerged from bankruptcy on Nov. 21, 2006.
For its fiscal year ended June 27, Winn-Dixie reported adjusted EBITDA of $85.9 million compared to a loss of $27.8 million last year and an identical-store sales increase of 1.6%
Sears ends deal with maternity retailer
PHILADELPHIA Sears and Mothers Work, the world’s leading maternity apparel retailer, will not be renewing their agreement, Mothers Work announced today. Under their current agreement, Mothers Works operates the maternity apparel department in 502 Sears stores through the sale of its Two Hearts Maternity branded merchandise.
Mothers Work said it expects its partnership with Sears to end on June 20, 2008, when it current deal with the company is expected to expire.
Rebecca Matthias, president and ceo of Mothers Work, noted, “While we are disappointed about the end of our relationship with Sears, we feel the decision not to proceed with a renewal is in the best interest of our stockholders since we were unable to reach terms on a renewal which would be favorable for Mothers Work and our stockholders. “