Chico’s on Monday wriggled out of the latest challenge from private equity firm Sycamore by opting out of a Florida business statute, according to a Chico’s press release.

The move was in response to Sycamore’s latest salvo, coming after three takeover bids that came in quick succession in recent days, each lower than the last. The apparel company’s board is mulling the latest offer for $3 per share, although it also has emphasized that members already unanimously rejected previous offers for $4.30 and $3.50.

On Friday, Sycamore sought to leverage a Florida provision that would deny voting rights to a shareholder that owns 20% or more of a company to request a special meeting of the board, according to Sycamore's letter, which was filed June 21 with the Securities and Exchange Commission.

Chico's said in its June 24 release that the special meeting proposed by Sycamore would only apply to the private equity firm's shareholdings and that it opted out of the specific Florida provision to ensure that all shareholders were enabled to vote. 

"We strongly believe that all Chico's FAS shareholders, not just Sycamore, should have the right to vote the shares they own," the retailer said in its statement. 

"While we currently have no shareholder that owns 20% or more of the Company's shares, at Chico's FAS, we believe that if you own any shares in our company, you should have the right to vote those shares —​ period," Chico’s board chair David Walker said in a statement released Monday.

The board unanimously approved the amendment to the company's bylaws to give all shareholders equal voting rights regardless of their holdings, he also said.  That essentially grants Sycamore its demand as outlined in their latest filing, ("requesting that the Company call a special meeting of shareholders within 50 days in accordance with §607.0902 of the Florida Business Corporation Act," per the letter to Chico’s from Sycamore Co-founder and Managing Director Stefan Kaluzny),  without the need for a special meeting, according to a Chico’s release.

No, thanks

In a typical capitalist scenario, when someone wants to buy something but an offer is rejected, the next one tends to be higher. When asked by Retail Dive why Sycamore would lower, rather than raise, its bid after each Chico's rebuff, a source with knowledge of Sycamore's thinking said in an interview that each bid was sent after bad news from Chico's, including its first quarter results and the departure of its chief executive.  

Sycamore, which already owns several retail banners including Staples, Talbots, The Limited and others, in letters accompanying its bids, has sought to emphasize the company's struggles. First quarter net sales fell 7.8% year over year to $517.7 million and overall comps fell 7%, due in part to lower average dollar sale and a decrease in transaction count​. Net income reached just $2 million compared to $29 million a year ago, and gross margin contracted 350 basis points year over year to $190.8 million or 36.9% of net sales.

In January, the company also announced a "retail fleet optimization plan" that will entail shuttering 250 stores over the next three years and a review of the company's operations to cut costs. But the company also made strides, especially in lingerie — earlier this year debuting a tech-enabled fit bra for its Soma brand and an e-commerce pure-play, TellTale, aimed at millennials. 

Several analysts, in client notes emailed to Retail Dive, expressed patience with the company's turnaround, although many also urged action in merchandising and leadership. MKM Partners Managing Director Roxanne Meyer, for example, called for the company to put in place a permanent CEO sooner rather than later, along with filling the empty merchandising chief post at White House Black Market where comps in the most recent quarter plunged 10%. But in client notes, analysts of late tend to publish price targets hovering around $4 to $5, well above Sycamore's more recent offers. 

"[W]e like what we are hearing from interim CEO Bonnie Brooks as it relates to the new strategic priorities, with growing sales and a customer-centric approach at the core," Meyer said in recent comments emailed to Retail Dive. "Healthy top-line growth is the key catalyst for the stock, so this was exactly what the Street needed to hear. We would expect the incoming CEO (with an announcement perhaps sooner than later) to have a merchant background, which deviates from prior leadership."

More broadly, Chico's simply doesn't need Sycamore to right the ship, according to Lee Peterson, executive vice president of thought leadership and marketing at WD Partners, who said the company's brands are poised to take back the dominance it once enjoyed among its core customer base of older women.

"They occupy a super underserved niche, 45- to 55-year-old women with nowhere to go other than Banana Republic, department stores [or] couture," he told Retail Dive in an email. "They just over-expanded and couldn’t change, like every other specialty store chain — but at one time, they ruled the earth.  Then someone got the brilliant idea that there should be a thousand of [them] and 3 off-shoot brands to boot . . . . greedy bastards. If they can get them to size and upscale the e-commerce / social / etc, [they can succeed again]."

Furthermore, private equity ownership is hardly a guarantee of salvation. In April, Sycamore paid itself $1 billion ahead of a possible IPO for Staples, which it acquired in 2017. That tidy dividend, which Bloomberg at the time noted "left even seasoned leveraged-buyout experts agog," was paid for with a loan that will stick Staples with an additional $130 million in annual interest costs.