Carter’s Inc., the children’s apparel giant, has put a shareholder rights plan in place to ward off the possibility of a hostile takeover, Retail Dive has reported.
The move follows news that hedge fund Roseman Wagner Wealth Management (RWWM) has quickly amassed nearly 17% of the company’s stock, according to filings made Wednesday.
Carter’s has said RWWM gave “no advance notice” of its buying spree and has not responded to outreach from management.
The plan, which takes effect after business closes on October 3, grants one preferred share purchase right for each outstanding common share.
The measure, which will remain in place for about a year, is designed to either prevent an unwanted takeover or strengthen Carter’s negotiating position if shareholders are open to a sale.
Carter’s, which operates more than 1,000 namesake and OshKosh B’gosh stores across North America and wholesales to other retailers, has struggled to regain momentum in recent years.
Analysts at Wells Fargo noted in May that the company has failed to deliver a positive comp since 2019 despite introducing a new pricing strategy.
At that time, newly appointed CEO Douglas Palladini pointed to “a challenging market environment and the possibility the Company may incur significantly higher product costs as the result of the new proposed tariffs on products imported into the United States.”
The retailer has since unveiled a turnaround plan that includes cutting expenses and closing about 100 stores as leases expire.
Still, Wells Fargo analysts led by Ike Boruchow said the business “has faced continual challenges since the pandemic.”
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