Genesco Inc. is making an appeal to shareholders ahead of its annual meeting.
In a letter filed today with the Securities and Exchange Commission, the Nashville, Tenn.-based company’s board urged shareholders to vote for all nine of its directors as it faces a battle with activist investor Legion Partners Asset Management LLC. The hedge fund, which owns about 5.6% of outstanding common shares of GCO, has waged a proxy contest to replace four of retail group’s independent directors.
According to Genesco, all nine of its directors have C-suite or equivalent experience, while eight have served at public companies and seven have worked in retail and consumer-facing industries as well as have a background in e-commerce.
“After careful consideration and diligence, Genesco’s board determined that Legion’s nominees do not have the right skills, experience and track records to serve on our board and create long-term value for shareholders,” wrote the Journey’s parent.
It added that the election of Legion’s nominees “would disrupt our substantial progress and business momentum; diminish the quality and strength of our board; and jeopardize our ability to execute on Genesco’s strategic plan.”
In the letter, Genesco cited its recent financial performance as a sign that its five-year plan under CEO Mimi Vaughn remains on track: For the first quarter ended May 1, the company posted adjusted profits of $11.6 million, or earnings of 79 cents per share, compared with the prior year’s loss of $51.4 million, or loss of $3.65 per share. The figure blasted past Wall Street’s predictions of a loss of 52 cents per share. Revenues surged 93% to $539 million, also besting analysts’ projections of $449.15 million.
What’s more, just over three weeks ago, Genesco added three new retail industry veterans to its board — none of whom were part of the pool nominated by Legion, which initially sought to name a controlling slate of seven individuals. Former Deckers Brands chairman and CEO Angel Martinez, former DSW CFO Mary Meixelsperger and former Tractor Supply Company CEO Greg Sandfort were added to the board, while directors Kathleen Mason and Marty Dickens will retire at the start of the annual shareholders meeting.
However, in a letter following the partial board refresh, Legion wrote that “this incremental change is not enough to break the culture of entrenchment, self-interest and underperformance in the boardroom.” FN has reached out to Legion following the release of today’s letter.
The shareholder meeting is scheduled for July 20. At market open on Monday, GCO stock was up 1.5% to $60.41.