An activist shareholder is questioning the leadership of Plymouth-based Christopher & Banks on the heels of a couple of tough quarters in which sales have plummeted at the women's specialty retailer.
On Wednesday, Jonathan Duskin of New York-based Macellum Advisors sent a letter to the company raising concerns about the board's oversight and its poor sales performance compared to similar retailers. He also suggested the company consider putting itself up for sale.
"There has been a revolving door of CEOs and we believe that, in aggregate, the Company's board of directors is not providing the proper oversight and does not have the requisite skill set to lead Christopher & Banks to achieve its full potential," he wrote. "We also believe the board is insular and would benefit from greater diversity in its composition."
He added that the board is "heavily-skewed" to Minneapolis-area business people who he said don't have enough background in specialty apparel.
Duskin — whose firm owns about 5 percent of the retailer's stock, making it its third-largest shareholder — stopped short of launching a proxy battle. He said he would wait to see whether the company's results improve after it works on inventory problems that rose out of recent delays at the West Coast ports. He added that he "will not sit patiently for long."
Christopher & Banks said Wednesday that it is reviewing the letter.
"We value the views of all shareholders and will evaluate the letter and any appropriate next steps carefully," Monica Dahl, the company's senior vice president of marketing, said in a statement.
Christopher & Banks had trouble finding its footing coming out of the recession and had a lot of turnover at the top for several years. The business began to stabilize under LuAnn Via, who was appointed chief executive in November 2012. She refocused the firm on basics, such as pants and denim, and consolidated stores into a format that includes plus sizes as well as missy's and petites. Under her direction, the company reported profits in the last two fiscal years after three straight years of losses.
But the turnaround stalled in the last two quarters amid a drop-off in sales, which it blamed on declining mall traffic and the West Coast port bottleneck. The company said it expects those shipping delays to continue to drag it down in the first quarter of this year.
The company's stock tumbled from a several-year high of $11.22 in September to a low of $4.29 in December. On Wednesday, the stock surged 6 percent to $5.92 upon news of the letter from Duskin, who made a similar overture toward The Children's Place.
Duskin said that Christopher & Banks seems to have felt a bigger effect from the West Coast ports issue than other retailers and he wondered if the current management did enough to help mitigate the problem when it first began to surface last summer.
As the company was searching for a new board member, he approached the retailer "on a friendly basis" to offer expertise and advice from potential board members, including Joel Waller, a former interim chief executive of Christopher & Banks. But he said he was rebuffed by the company.
Instead, the company earlier this week announced the appointment of Edwin Holman as its ninth board member. It said he was chosen after an "extensive search process" that included the help of a national search firm. It also noted that Holman is a "seasoned retailer" with an extensive background in the field including a post as chief executive of Macy's central division from 2004 to 2009.
Duskin also questioned the board's decision to replace Waller with Via, noting that the company saw improved results under his leadership. Still, Duskin said the company remains an attractive investment opportunity given its loyal customer base and strong brand awareness among its target demographic.