A group of investors reportedly sent a letter to Big Five Sporting Goods’ board of directors on May 7 asserting the sporting good chain’s share are “undervalued and represent an attractive investment opportunity,” according to a press release from the law firm Johnson Fistel.
The Group is urging “significant changes,” including changes to the company’s senior management and its marketing.
The press release didn’t indicate how much of a position the shareholders had taken in Big 5, but stated that the group includes individuals who have “decades of experience as C-level executives at publicly traded off-price retail companies as well as extensive experience in the shoe industry (one of Big 5’s largest sources of revenue).”
Johnson Fistel also noted that it has “extensive experience” representing shareholders in connection with securities litigation and corporate takeover litigation.
Among the suggestions from the group listed in the press release were, promote Big 5 as an “off-price retailer” rather than a sporting goods chain, reduce its reliance on weekly print advertisements and invest in radio, TV and social media in marketing; place a greater emphasis on its athletic footwear category; eliminate or reduce the dividend and reinvest in the company; eliminate carry-over inventory and replace senior management or find a buyer.
The letter ended, “We intend to monitor closely the developments at the company. If we do not hear from you within a week of the date of this letter, the group reserves its rights to take whatever actions necessary, including making an appeal to the shareholders at large or initiating a takeover attempt, intended to protect the best interests of all shareholders.”
Big 5 also faced activist investor pressures in 2015 and 2016 from investors, including Stadium Capital Management, with the threat of a proxy content. The situation was resolved after Big 5 agreed to revise its slate of director nominees to include a representative from Stadium Capital.
