Sends Letter Urging Shareholders to Reject Conflicted Karpreilly Slate
Charlotte Russe Holding, Inc. (Nasdaq: CHIC) announced today that it has
filed its Definitive Proxy Statement and is mailing the following letter
to shareholders urging them to vote for the Company's director nominees
in connection with its 2009 Annual Meeting of Stockholders:
Dear Shareholder:
PROTECT YOUR INVESTMENT; PLEASE SIGN AND RETURN THE WHITE PROXY CARD
TODAY!
Last July, in a difficult operating and economic environment, your Board
moved aggressively to position Charlotte Russe for future growth and
better long-term profitability. Today, while the Board moves forward
with the recently announced sale process, new management is implementing
a detailed plan to transform Charlotte Russe into a high-performing,
top-tier specialty retailer. The plan was designed to correct the legacy
of strategic errors that the Board believes were made in years when
Allan Karp – owner of private equity firm KarpReilly – was Charlotte
Russe’s largest stockholder and the person other Board members
considered its most influential director.
While we continue to implement important changes to the business and
pursue strategic alternatives, Charlotte Russe remains financially
strong, is generating positive cash flow and is well positioned to
weather the challenges presented by today’s difficult economy.
YOUR BOARD IS WORKING TO MAXIMIZE SHAREHOLDER VALUE WHILE
TRANSFORMING CHARLOTTE RUSSE INTO A TOP-TIER SPECIALTY RETAILER
The Board determined in mid-2007 that the Company’s operating
performance was dropping off and that the Company would benefit from
more discipline against basic retail operating metrics. The Board also
questioned the viability of the claim by the management team in charge
at that time that it would achieve double-digit operating performance by
the end of 2008. During the period when Mr. Karp played a leading role
in running Charlotte Russe, the Company aggressively expanded its fleet
of stores. The resulting top-line growth was initially well received by
the stock market, and private equity funds affiliated with Mr. Karp were
able to dispose of their holdings in the Company at a large profit.
While these policies worked well for Mr. Karp, they left Charlotte Russe
with an abundance of over-sized stores in sub-par locations and
unfavorable leases that have saddled the Company with excessive costs
and rent obligations. In light of these problems, the Board determined
further that more aggressive management was required to ensure that the
Company continued to grow and deliver value to shareholders.
Today, we are rebuilding Charlotte Russe by focusing on five key areas:
brand positioning, merchandise assortment, inventory optimization, real
estate strategy and capital utilization. Our strategic plan addresses
operational, merchandising and inventory performance issues, which have
prevented Charlotte Russe from achieving its full potential. In November
2008, your Board hired a new management team with more than 70 years of
experience at top retailers, including Mervyn’s, Dockers, Kmart, Gap,
Old Navy, Banana Republic, Bloomingdale’s, Cadeau Maternity, Barneys New
York and Guess?
In a short period of time, the team has made significant strides in
advancing the plan, including strengthening the brand, introducing
exciting marketing initiatives, bringing new operating discipline, and
positioning Charlotte Russe for future growth.
In January of this year, in view of the challenging stock market and
after receiving potential expressions of interest from third parties,
your Board determined to conduct a disciplined review of strategic
alternatives with the objective of maximizing potential value for all
shareholders. This review has continued and, encouraged by shareholders,
the Board determined to engage in a fair and impartial sale process
involving the solicitation of formal expressions of interest from a
range of financial and strategic buyers.
