Urges Stockholders to Elect New, Highly Qualified Director Nominees that have the Experience Necessary to Maximize Value for Stockholders

GREENWICH, Conn., March 31 /PRNewswire/ -- KarpReilly LLC ('KarpReilly') announced today that it has sent a letter to the stockholders of Charlotte Russe Holding, Inc. ('Charlotte Russe' or the 'Company') (Nasdaq: CHIC) urging stockholders to elect three highly qualified and experienced director nominees, Allan Karp, Hezy Shaked and Gabriel Bitton, at the Company's 2009 annual meeting of stockholders on April 28, 2009. The KarpReilly group is the largest stockholder of the Company and beneficially owns approximately 8.9% of the outstanding shares of the Company's common stock.

The full text of the letter follows:

March 31, 2009

SUPPORT KARPREILLY NOMINEES FOR CHARLOTTE RUSSE BOARD

CURRENT BOARD'S INTERESTS ARE NOT ALIGNED WITH STOCKHOLDERS

Dear Fellow Stockholders of Charlotte Russe Holding, Inc.:

We are seeking your support to elect three highly qualified and experienced retail / apparel executives and business owners to the Board of Directors of Charlotte Russe at the April 28, 2009 annual meeting. We are increasingly alarmed by the actions taken by the Charlotte Russe Board of Directors, which we believe have not been in the best interests of stockholders.

Contrary to arguments made by the Company in its proxy statement, we are not seeking Board representation out of opposition to the sale of the Company. In fact, the Board only publicly announced the potential sale of the Company after we nominated our slate of directors. Our nominees will represent a minority of the Board and will therefore not have the power to block a sale. We believe it is not in the best interests of the stockholders to sell the Company at distressed levels, and that our nominees' participation as Board members in this process is critical to producing an outcome that is in the best interests of all stockholders. In the event a sale is not consummated in this difficult economic environment that has produced very few completed deals, our nominees are committed to implementing the strategic and operational changes we believe are needed to maximize value by:

• Working to restore financial discipline to the Company and right-sizing its overhead structure;
• Actively overseeing and critically evaluating management rather than delegating responsibility to outside consultants; and
• Calling upon our over 75 years of combined retailing experience to recreate the success achieved by the Company during Allan Karp's 11-year tenure as a major stockholder and an active Board member.

It is imperative that the Board include stockholder representation to re-establish a true ownership mentality at the Company. Our interests are aligned with yours.

THE CURRENT BOARD'S LACK OF A COHERENT PLAN IS HURTING STOCKHOLDERS

We believe the Charlotte Russe directors have not only overseen a dramatic deterioration in the value of our Company, but through their actions have helped to cause it. The Board's recent stockholder letter clearly highlights the absurd and haphazard approach to decision making and planning this Board has exhibited, which, as far as we can tell, goes something like this:

FIRST: ALIENATE SENIOR MANAGEMENT, HIRE INEXPERIENCED REPLACEMENTS AND PAY THEM A LOT OF MONEY

In its recent letter to stockholders, the Board stated: 'Last July [2008], in a difficult operating and economic environment, your Board moved aggressively to position Charlotte Russe for future growth and better long-term profitability.' How did they do this?

• By asking the Company's President and CEO to retire without, it appears, ever devising a succession plan and without any regard to the effect this action would have on other senior executives. What was the result of this ill-conceived decision? The Company's Chief Financial Officer and General Merchandising Manager resigned because, according to their public statement, 'we do not feel comfortable with the level of collaboration with the Board of Directors'. A California administrative law judge went even further in a ruling against the Company regarding the resignation of one of these executives:

'[Charlotte Russe] obtained a new chief executive officer [Leonard Mogil] with little or no experience... The fashion direction and business decisions were now being directed and influenced by outside consultants, as directed by the Board of Directors, who had no previous direct experience, with a retailer in the fast fashion sector... The board heightened levels of spending to solicit the advice from outside consultants...Decisions were being made that affected the profitability of the company as new expenses, including board travel, consultant fees, [and] increased board compensation, [were] putting the company under significant financial pressure in terms of additional spending. This level of spending was unprecedented in the company's history. These additional expenditures were not budgeted and did not have the best interests of the shareholders in mind (emphasis added)...'

• In just over two weeks, from the day prior to the announcement of the CEO's 'requested' retirement to the day after the announcement of the resignations of the CFO and GMM, Charlotte Russe suffered a 38% decline in its stock price.
• The Board's response to the management upheaval it caused? Plan A was to name one of its own, Leonard H. Mogil, a former Phillips-Van Heusen executive who retired in 2001, as interim CEO and CFO (despite no prior CEO experience) and pay him $678,000 in cash, stock and perquisites for less than four months' work. While serving as interim CEO and CFO, Mr. Mogil presided over the worst operating profit performance in the Company's history.
• What was the Board's Plan B? Hire, as the Company's top two executives, individuals with minimal junior fast fashion experience, whose most recent employers have filed for bankruptcy, and agree to pay them a combined base salary of $1.5 million, almost $500,000 in signing bonuses and over 500,000 shares in the form of stock awards. The combined base salaries of these executives are 36% more than the fiscal 2008 base salaries of the Company's former CEO and GMM and 20% more than the weighted average base salaries of the CEOs and GMMs of the Company's peer group.

Is this the Board's way of positioning Charlotte Russe for 'future growth and better long-term profitability'?

SECOND: HIRE EXPENSIVE CONSULTANTS TO DO THE JOB OF MANAGEMENT

The Board also states in its stockholder letter that it determined that 'the Company would benefit from more discipline against basic retail operating metrics' and that 'more aggressive management was required to ensure that the Company continued to grow and deliver value to shareholders.' How did the Board implement this 'discipline' and 'aggressive management'? By deferring to expensive, outside consultants to come up with a strategic plan. So far, the only results we've seen are:

• SG&A expense has grown 84% faster than revenues since Mr. Karp's departure.
• A significant increase in marketing expenses, including hiring a 'brand ambassador' and 'celebrity stylist'.
• A $65 million supply agreement with a premium denim brand to offer jeans at almost 2 1/2 times the average price point for Charlotte Russe jeans.

We believe decisions such as these are wholly inconsistent with the Company's value-oriented concept and represent exactly the kind of strategic missteps that occur when an inexperienced Board relies on consultants.

THIRD: IGNORE BONA FIDE ACQUISITION PROPOSALS AT HIGHER VALUATIONS, THEN LOOK TO SELL AT LOWER VALUATIONS

Consider the Board's response to previous acquisition proposals made by KarpReilly:

• KarpReilly initially made a private proposal to acquire 100% of the Company at a 'substantial premium to the recent trading range for the Company's stock' on November 20, 2007. The stock closed at $14.41 that day.