Holder Says Charlotte Russe Turnaround Unlikely
Baltimore Hedge fund Plainview Capital LLC said late Monday that Charlotte Russe Holding Inc.’s plans for a turnaround are unlikely given the recession, and recommended Charlotte Russe look for potential buyers or consider a proposal it has previously spurned from two investment firms.
Late last month the retailer said its board unanimously opposed a nearly $200 million takeover offer by KarpReilly Capital Partners LP and H.I.G. Capital LLC.
The two firms announced their bid on Nov. 12, valuing it at $188.1 million to $198.6 million, a premium of 31% to 38% over Charlotte Russe’s closing stock price the day before.
But Charlotte Russe rejected the bid, saying it wanted to stick to its turnaround plan, noting it began a review of the business last year and brought in new management with the goal of transforming the mall-based chain into a top-tier specialty retailer.
In a news release Monday, Plainview Capital LLC said it had “serious concern regarding the failure of the board of directors to maximize shareholder value of the company.”
It said the offer represented a fair value for the retailer. Meanwhile, the company’s transformation plan, it said, was a “risky alternative to accepting the buyout proposal, particularly in light of the severe downturn in the retail industry, prior strategic errors, and negative same-store sales/earnings trends for Charlotte Russe.”
Target goes Thai with new designer
In one of the more highly anticipated launches of its GO International Collection, Target next week will introduce a new line of swimwear and apparel from Thakoon Panichgul.
Born in Thailand and raised in Omaha, Neb., since the age of 11, Panichgul is a designer who burst on the fashion scene in 2004, and quickly rose to prominence in fashion circles. He gained notoriety this fall when Michele Obama wore one of his dresses as she shared the stage with her husband after his acceptance speech at the Democratic National Convention. The dress she wore that evening cost upwards of $1,000, and Panichgul’s other designs cost even more at retailers such as Neiman Marcus and Saks Fifth Avenue. Prices at Target will range from $16.99 to $44.99.
“Thakoon Panichgul is an extraordinary design talent with a keen eye, whose brilliantly priced collection is sure to please our guests,” said Trish Adams, senior VP at Target. “His silhouettes are trend-forward with an urban femininity, providing chic looks at a great value.”
GO International is a program squarely aligned with Target’s “expect more, pay less” brand promise, as it provides customers access to exclusive product created by well-known designers for a fraction of what they would pay in high-end department stores. The product offering also brings excitement, newness and a sense of urgency to the apparel department, since the collection only is available for a limited time.
Prior to Panichgul, Target partnered with American designer Richard Chai, whose designs were offered throughout August. And in October, it was Scottish-born designer Jonathan Saunders whose limited edition designs were found in Target.
According to the company, its newest line, called Thakoon for Target, provides a contemporary take on classic resort must-haves, with stunning graphic prints and a colorful palette.
KB’s loss could be Target’s gain
As one of the nation’s largest toy retailers, Target is poised to benefit from the demise of KB Toys, as the toy specialist’s filing for Chapter 11 will likely result in the elimination of toy selling capacity.
KB Toys became the latest retailer to fall victim to the difficult economy when it filed for Chapter 11 bankruptcy protection following a significant drop in sales at its 277 stores. The retailer reported that same-store sales from the period between Oct. 5 and Dec. 8 fell nearly 20%. In its filing in U.S. Bankruptcy Court in Delaware, KB stated that it had debts between $100 million and $500 million and total assets in the same range.
The company said that it plans to close all of its stores and begin liquidation sales in the middle of the holiday season.
Back in January 2004, KB filed for reorganization under Chapter 11 after a dismal holiday selling period, only to later to emerge from bankruptcy in August 2005. This time around, the retailer isn’t waiting to see how the holidays turn out. Though the season is a critical time for most toy retailers, according to The NPD Group, toy sales are expected to be flat or down slightly from last year, so KB isn’t holding its breath.