Barington Capital, Macellum Advisors Urge Changes at Children’s Place

Activist hedge funds Barington Capital Group and Macellum Advisors GP have begun agitating for change at The Children’s Place Inc. The two hedge funds together beneficially own over 2 percent of the outstanding common stock of the company, which was acquired over the course of the past year. Barington has had particular experience in the retail and apparel sectors via past stakes in Collective Brands, Dillard’s, Nautica, Payless ShoeSource, Steve Madden, The Jones Group and Warnaco. Barington and Macellum sent a letter to Norman S. Matthews, chairman of The Children’s Place, on Wednesday. In the letter, the two urge the company to make changes, including, but not necessarily limited to, the possibility of a sale. They also noted their lack of confidence in the current management team. While the children’s retail chain represents an “attractive investment opportunity at its current trading valuation,” the hedge funds noted that the retailer trades at a “model valuation of 6.0x enterprise value to EBITDA.” The discounted valuation, they suggest, is due to deteriorating operating performance since 2010 under the leadership of the current chief executive officer, Jane Elfers. They said in their letter that EBITDA has declined 26 percent to $156.1 million for the 12 months ended

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