Dive Brief:

• Activist investor Barington Capital Group LP said Tuesday that it has launched a proxy contest to elect two directors to sit on the board of mall-based retailer Chico’s FAS Inc. in an effort to promote cost-cutting and more effective management.

• Barington, led by retail veteran James Mitarotonda who, along with former Macy’s executive Janet Grove are the nominees, owns a 1.4% in Chico’s and says the retailer is under-valued and is under-performing on overly high expenses. The investment firm says it has been in private talks with Chico’s since March.

• Chico’s has already taken steps to address Barington’s concerns, according to Barington’s press release, by bringing on retail veteran Shelley Broader as CEO in December, whose plans include cost cutting, better marketing, better use of data, and stronger integration of the retailer’s online and store operations. But Barington insists the retailer could go further.

Dive Insight:

Chico’s, a mall-based apparel chain that also runs lingerie retailer Soma Intimates and White House Black Market, has been distracted not just by tepid sales but also by a failed takeover attempt by private equity firm Sycamore Partners Management last year. Sycamore couldn’t line up the needed financing to buy the women’s apparel chain and dropped its buyout plans in February 2015. 

Since then there have been layoffs and continued trouble gaining traction among its core customer base of older women, which analysts say is an under-served market. The apparel retail market in general has also been seeing tepid sales at many retailers as customer spending habits shift online and mall traffic declines. 

In the last fiscal year, the company’s revenue fell to $2.64 billion and same-store sales fell 1.5%, while profits fell to $1.9 million, in part due to its shuttering of its Boston Proper brand, according to the Wall Street Journal.

“Chico's common stock is down approximately 77% from its all-time high of $48.90 per share on February 21, 2006, and …has significantly underperformed its peers and the market as a whole over the past one, three, five and ten-year periods,” Barington said in a press release. “Barington is convinced that if the Company were more effectively managed and corporate overhead and SG&A expenses were reduced to levels comparable to its peers, Chico's could more than double its earnings per share in three years.”

Analysts also see potential in the retailer, and believe Broader’s efforts could bear fruit because the retailer has been receptive to her initiatives. Those include her shakeup of Chico’s marketing and online efforts for an expected annual savings of $14 million, according to the Journal. Barington, though, says more cost-cutting and more re-alignment are in order.

Broader had been president-CEO of Wal-Mart’s Europe, the Middle East and Africa region, and was previously president and CEO of Wal-Mart Canada, merchandising chief at Wal-Mart Canada, and SVP for Wal-Mart’s warehouse unit, Sam’s Club. She has had both a long 25-year career in retail, and also a varied one, including a stint as a member of President Obama’s Advisory Council on Doing Business in Africa.