Perry Ellis International, the Doral-based apparel business, is facing pressure from activist investors to seek strategic alternatives, citing the company’s poor financial performance.
Legion Partners, LLC and the California State Teachers’ Retirement System, which together own 6.3 percent percent of publicly traded Perry Ellis stock, on Tuesday released a letter requesting that the board of directors form a special committee to explore strategic alternatives. Perry Ellis has not responded to the letter, which was send last month, the shareholders said.
Perry Ellis issued a statement Tuesday, saying the board and management team are committed to acting in the best interests of the company and all Perry Ellis shareholders.
“Perry Ellis strives to maintain constructive, ongoing communication with its shareholders and welcomes the views and opinions of its shareholders with the goal of enhancing value for all shareholders,” the company said.
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Calling for action, the activist shareholders cited the causes for the company’s performance problems as “a combination of the company’s governance structure, poor alignment and incentives, and the dominant family control present in management and at the board level.”
“We believe there is serious interest in Perry Ellis from strategic buyers, and that the board has a fiduciary responsibility to objectively evaluate all viable alternatives to maximize value for all shareholders,” Chris Kiper, managing director of Legion Partners, said in a statement. “This evaluation process must consider the risk profile of alternative courses of action from Perry Ellis’ current strategy. We are concerned that the status quo, under the leadership and control of the Feldenkreis family, entails a very high risk that Perry Ellis will continue to underperform, causing irreparable value destruction for shareholders.”
The company is led by George Feldenkreis, Perry Ellis’ chairman and chief executive, and his son Oscar Feldenkreis, the company’s president and chief operationg officer. Perry Ellis’ portfolio of brands includes Jantzen, Laundry by Shelli Segal, C & C California and Original Penguin.
For the second quarter, Perry Ellis reported a net loss of $1.6 million, or 11 cents per share, on revenues of $203.5 million. Revenues were down 4 percent from the same period of last year. Perry Ellis is reporting third quarter earnings on Thursday.