Chico's takes a ‘poison pill’ amid COVID-19 outbreak
Chicos’s FAS Inc. is the second retailer in recent days to adopt a limited duration shareholders rights plan after disruptions due to COVID-19 pandemic.
The women’s apparel retailer adopted the plan, the so-called "poison pill,” saying it was in the best interest of all its shareholders. The plan aims to guard against any individual or group gaining control of the company in the open market without paying a premium. (Tailored Brands, parent company of Men's Wearhouse and Jos. A. Bank, adopted a shareholders rights plan on March 31.)
“In adopting the Rights Plan, the board has taken note of the unprecedented impact of the global COVID-19 pandemic on equity market valuations, including the dislocation in the company's stock price,” Chico’s stated. Given the current environment and trading levels as well as the importance of maintaining focus on the company's operations, safeguarding the welfare of employees and serving customers, the board believes adopting the rights plan is in the best interest of all Chico's FAS shareholders.”
Similar to many other specialty retailers, Chico’s has furloughed the majority of its employees, who will continue to receive health benefits. Most employees who remain on the payroll will either take a 50% pay cut or an equal reduction in hours, except those working at the company’s distribution center who are supporting its online business.
Chico’s is issuing one right per each common share as of the close of business April 13, 2020. The rights become exercisable if someone or an entity acquires 10% or more of the common stock. Chico's portfolio of brands includes the namesake and White House | Black Market.
Chico’s rights plan has a one-year duration, expiring on April 1, 2021.