UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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The Securities Exchange Act of 1934
(Amendment No. )
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Preliminary Proxy Statement
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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CITI TRENDS, INC.
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(Name of Registrant as Specified in Its Charter)
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MACELLUM ADVISORS GP, LLC
MACELLUM SPV III, LP
MACELLUM CAPITAL MANAGEMENT, LLC
MACELLUM MANAGEMENT, LP
MCM MANAGEMENT, LLC
MCM MANAGERS, LLC
JONATHAN DUSKIN
PAUL METCALF
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
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Macellum Advisors GP, LLC,
together with its affiliates (collectively, “Macellum”), has made a definitive filing with the Securities and Exchange
Commission of a proxy statement and accompanying WHITE proxy card to be used to solicit votes for the election of its slate of
highly-qualified director nominees to the Board of Directors of Citi Trends, Inc., a Delaware corporation (the “Company”),
at the Company’s upcoming 2017 annual meeting of stockholders, or any other meeting of stockholders held in lieu thereof,
and any adjournments, postponements, reschedulings or continuations thereof.
On May 17, 2017, Macellum issued the
following press release:
Macellum Announces that Glass Lewis & Egan-Jones Recommend Citi
Trends Stockholders Vote FOR Macellum Nominees, Jonathan Duskin and Paul Metcalf, on Macellum’s
WHITE
Proxy Card
Macellum Strongly Believes Stockholders Must
Elect Both Nominees to Maximize Value
Says Existing Board Should Not be Allowed
to Select a Permanent CEO
NEW YORK,
May 17, 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, announced today that
Glass Lewis & Co. (“Glass Lewis”) and Egan-Jones, two leading independent proxy voting advisory firms, have recommended
that stockholders vote on Macellum’s
WHITE
proxy card
FOR
the election of
BOTH
Macellum
nominees, Jonathan Duskin and Paul Metcalf, at the upcoming annual meeting of stockholders.
In its May 16
th
report
1
,
Glass Lewis concluded:
“
We believe the board could benefit from additional
fresh perspective and oversight, particularly as it prepares to select the next CEO to lead to the Company.”
Glass Lewis agreed with Macellum that Chairman Anderson likely
bears responsibility for the Company’s poor historical performance:
“Management Nominees Anderson and Hyatt have served
on the board for 16 years and 11 years, respectively, and we expect shareholders may wish to hold these two long-serving directors
responsible for the Company’s poor TSR performance and operating challenges under their leadership. Management Nominee Anderson
has intermittently served as executive chairman, non-executive chairman and CEO of the Company over the last 16 years and likely
bears considerable responsibility for the Company’s poor performance under his tenure, in our view.”
1
Permission to quote from the Glass Lewis report in this press release was neither sought nor obtained.
Macellum believes stockholders must vote for BOTH Mr. Metcalf
and Mr. Duskin to effectuate meaningful change
Macellum believes the election of both Mr. Metcalf and Mr. Duskin
to the Board represents the best path for creating value at the Company. Mr. Metcalf is an exceptionally well-qualified candidate.
He has a long career of success in off-price retailing. He was hired by Bain Capital to be the Chief Merchant at Burlington Stores,
Inc. at a time when Burlington was struggling. As Chief Merchant at Burlington, Mr. Metcalf was responsible for turning the merchandise
department around and played a key role in driving EBITDA from $311 million to $445 million. Burlington’s stock price was
over $60 per share when Mr. Metcalf resigned (up from $16 at the IPO). Mr. Metcalf had similar success as a Director of private,
off-price retailer Gabriel Brothers. After a successful turnaround, Gabriel Brothers was recently sold at 8x EBITDA to Warburg
Pincus.
In recommending that stockholders vote for
both
Macellum’s
highly qualified nominees, and contrary to Citi Trends’ portrayal of Macellum’s nominees, Glass Lewis recognized the
significant relevant experience and qualifications of Jonathan Duskin and Paul Metcalf:
“Dissident Nominee Jonathan Duskin is CEO of Macellum
and would serve as a direct representative of Macellum if elected to the board. Mr. Duskin has decades of investment experience
in the retail and consumer sector and relevant public company board experience in the specialty retail industry. Dissident Nominee
Metcalf has relevant executive and merchandising experience in the off-price retailing industry that could likely be of value to
the board, in our view.”
The current Board should not be allowed to select a permanent
CEO
Given their disappointing track record of recruiting and retaining
a qualified CEO, we believe it would be a grave mistake for stockholders to give the Board an opportunity to hire the next CEO.
We are extremely concerned that leaving Mr. Anderson at the helm will do just that. Further, without meaningful change on the Board,
we believe Citi Trends will struggle to recruit high caliber candidates. We believe high quality executives will be skeptical of
the opportunity knowing that the former CEO, Jason Mazzola, left the Company for a substantially lesser role.
Stockholders should be concerned, as we are, that Citi Trends may
seek to promote acting CEO, CFO and COO Bruce Smith to the role of permanent CEO. He has been with the Company for 10 years which
saw extended periods of deteriorating operating results and value destruction. He must share in the blame as well and stockholders
should not allow him to be rewarded with a promotion to permanent CEO. As COO, we would expect that IT reported directly to Mr.
Smith and as CFO capital allocation would have been a primary responsibility. Mr. Smith must be held accountable for the deterioration
in RIOC and ROE and for the Company’s antiquated systems. We would not be surprised if this finance heavy Board felt comfortable
promoting Mr. Smith to permanent CEO. Do not give Mr. Anderson an opportunity to make the mistake again of promoting an unqualified
internal executive.
Vote the
WHITE
Card for
Both
Macellum Nominees
We leave stockholders to consider one issue central to this election
contest. If Citi Trends is an off-price retailer, it failed to take advantage of the greatest segment of growth in all of apparel
retailing. If the Board changed its strategy to be a vertically integrated, private label retailer, then we believe this was a
poor decision. Why would the Company migrate its strategy away from the most successful category of retailing, arguably the ONLY
segment of apparel retail that is experiencing growth to pursue one of the most difficult segments? Either way, we believe the
Board needs to be refreshed and Mr. Anderson needs to be replaced. As Glass Lewis concluded, the election of the Macellum nominees
would make the Board well positioned to represent the interests of all stockholders:
“If elected, the Dissident Nominees would hold two
out of six board seats, representing a minority of the board, and would not be in position to enact policy without the support
of additional directors. We believe a board constructed in this manner would be well positioned to represent the interests of all
shareholders.”
VOTE
THE
WHITE
PROXY CARD TODAY TO ELECT
BOTH
OF OUR HIGHLY-QUALIFIED NOMINEES — JONATHAN DUSKIN AND PAUL METCALF
— TO THE BOARD AT THE COMPANY’S UPCOMING ANNUAL MEETING
If you have already
voted Citi Trends’ blue proxy card, a later dated
WHITE
proxy card will revoke your previously cast vote.
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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