French Connection’s board room drama has escalated, with shareholders issuing an ultimatum to chief executive Stephen Marks to either step down from one of the top jobs or sell up.
According to This Is Money, London-based investment firm Gatemore Capital — which holds an eight per cent stake in the fashion retailer — gave the ultimatum after Marks was reappointed to his dual role of chief executive and chairman last week.
Independent investors have been vocal in their criticism of French Connection’s state of the business over the past five years, with consecutive losses causing its stock value to divebomb.
These came to a head during the company‘s annual general meeting last week, accusing Marks of “not playing it clean”.
Marks — who owns a 42 per cent stake in the retailer — remains at the heart of the criticism, refusing to give into pressure to relinquish his dual role as both chairman and chief executive.
Other critical concerns for shareholders included a lack of transparency over bonuses and an equal lack of truly independent directors.
There is speculation the board room battle could end in Sports Direct owner Mike Ashley increasing his 11 per cent stake on the company if smaller shareholders decide to sell.
Gatemore chief investment officer Liad Meidar told This Is Money: “There are people out there who feel they have a God-given right to be on a board and are welcome to run the business as they see fit… something needs to be done about it. We are doing that something.”
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Meidar wants Marks to break up the French Connection retail empire and sell, making with estimates it would be worth between £80 million and £100 million.
Meidar added that not doing so could provoke smaller shareholders to collectively demand action.
However, those who support Marks want him to keep all his roles to keep its turnaround plan on track.
The company said: “We are well aware of the views of a small group of shareholders. We are delivering a turnaround plan which is designed to streamline the business and return it to profitability. Management‘s focus is on achieving this.”
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