NEW YORK, May 2, 2017 /PRNewswire/ -- Macellum SPV
III, LP, Macellum Advisors GP, LLC, and certain of their affiliates
(collectively, "Macellum"), a large stockholder of Citi Trends,
Inc. (NASDAQ: CTRN) (the "Company" or "Citi Trends") that has
nominated two highly qualified candidates for election at the
Company's upcoming annual meeting of stockholders, Jonathan Duskin and Paul
Metcalf, today expressed its bewilderment by the Company's
claims that it began a "strategic pivot" in 2012, under Executive
Chairman Ed Anderson, which has
dramatically improved the Company's performance. Macellum
notes that a simple review of the facts clearly contradicts the
Company's claims:
- Concept of Strategic Pivot Appears for First Time in
April 2017 – The Company's
concept of a "strategic pivot" away from nationally recognized
brands only appears in the Company's public disclosure for the
first time in April 2017, in the
middle of a contested election. For the preceding five (5)
fiscal years (fiscal years 2010-2015) and as late as March 2017, the Company continued to market
itself as a provider of "leading national brands at off-price
values."
- Self-Inflicted Mistakes Resulted in the Deterioration –
The Company's purported operational improvements since 2012 follows
the worst performance in the Company's history due, primarily, to
the Company's disastrous decision to change its strategy to making
long-term, up front commitments for future seasons purchases and
the promotion of an ill-suited candidate to CEO in 2009 whose lack
of merchandising experience resulted in a 71% decline in
EBITDA over his tenure.
-
- Citi Trends' sales per square foot declined at least four years
prior to the Company's claim that a decline in sales of urban
brands in 2010 and 2011 caused the Company's precipitous decline in
comparable store sales, gross margins and EBITDA.
- But do not take Macellum's word for it - consider the Company's
own statements:
-
- "Despite all the external factors, the biggest
contributor to our poor sales and, therefore, poor operating
results was our own performance." – Mr. Anderson
conference call dated 3/9/12
- "I will talk a little bit about brands, and Ladies in
particular, and where I'll focus on is a little bit of the decline
of the Cache and Urban brands from their height several years ago.
However, much of Citi Trends' issues with these brands have been
self-inflicted." – Mr. Mazzola conference call dated
5/16/12
- Off-Price Competitors Did Not Suffer Due to Declines in
Urban Brands – While the Board
struggled to find a solution to the decline in the popularity of
urban brands, competitors were able to adapt and
flourish. Off-price competitors, TJX, ROST and BURL, have
experienced significant same-store sales growth since 2010.
- Citi Trends Ignores Performance of Its Proxy Peers During
Pivot Downturn – The Board isolates the period of
January 2010 through December 2011 as the Company's pivot
downturn. However, the Company's proxy peers did not
experience a similar downturn during this period. It is not
surprising that the Company then experienced a TSR gain off this
low point having underperformed their proxy peer group by 94%
during their purported downturn period.
- Board Fails to Recruit and Retain Qualified CEO Again
– The Board has once again failed in its most fundamental
duty of recruiting and retaining a qualified CEO with the sudden
departure of Jason
Mazzola.
- Company's Prolonged Underperformance Cannot Be Masked
– Since Mr. Anderson became Chairman of the Board in
May 2006, Citi Trends' TSR is DOWN
66%, compared to the S&P 600 Retailing Index UP 27%
and the S&P Retail Index UP 201% through March 8,
2017. If you invested $1.00 in
Citi Trends when Mr. Anderson became Chairman, you now have
$0.34.
A full copy of Macellum's investor presentation and rebuttal
presentation to the Company's investor presentation can be found on
Macellum's dedicated website, www.fixcititrends.com.
Macellum urges stockholders to vote today on the WHITE
proxy card to elect its two highly qualified nominees —
Jonathan Duskin and Paul Metcalf — to the Board at the Company's
upcoming annual meeting.
Investor Contact:
Jonathan
Duskin
Macellum Capital Management, LLC
(212)-956-3008
Jduskin@macellumcap.com
John Ferguson
Saratoga Proxy Consulting LLC
(212) 257-1311 or (888) 368-0379
Info@saratogaproxy.com
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SOURCE Macellum Capital Management, LLC