• Home
  • News
  • Business
  • The day French Connection’s CEO got an ultimatum from shareholders

The day French Connection’s CEO got an ultimatum from shareholders

By Angela Gonzalez-Rodriguez

loading...

Scroll down to read more

Business

After months of back-and-forth between French Connection’s founder and current CEO, Stephen Marks, and shareholders, one of the biggest minority owners in the retailer’s capital, has issued an ultimatum for Marks.

Gatemore Capital, which owns around 8 percent of the company, has demanded French Connection’s chief executive, chairman and major shareholder Marks to step down from one of his roles, or sell his stake.

Tense AGM for French Connection: shareholders demand CEO to leave or sell his 42 percent stake

Tipping point occurred last week during the AGM, where more than half of independent shareholders rebelled against the reappointment of both Marks and non-executive director Dean Murray. Nevertheless, both were re-elected by a show of hands.

Commenting the news, Gatemore chief investment officer Liad Meidar said: “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,” confirmed Meidar.

In response, the company issued a statement saying that “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.”

Main shareholder asks for French Connection to be split in two different businesses

Meider insisted French Connection’s retail and wholesale divisions should be split into two businesses. He said a failure to do that could spark smaller shareholders to join forces and demand action. Alternatively, Gatemore will see Marks either dropping some of his titles or selling his stake in the company as the only viable solution.

The strangled relationship between Marks and his company’s shareholders has deteriorated profoundly over the course of time, worsened by five consecutive years of losses at the fashion retailer, with annual losses widening from 3.5 million pounds to 5.3 million pounds last year alone.

On the back of the tensions – and the weakened business prospects - former institutional investor Schroders offloaded its stake in French Connection earlier this year, allowing Sports Direct’s founder Mike Ashley to snap up an 11 percent stake.

To this point, ‘The Daily Mail’ reported back then that the ongoing tensions between Marks and the company’s investors could result in Ashley increasing his stake at the retailer, should other smaller investors opt to sell up.

Marks founded French Connection in 1972 and retains a 42 percent stake in the company.

Photo:French Connection Web

French Connection