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Macellum Issues Letter to Stockholders of Citi Trends

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Macellum SPV III, LP, Macellum Advisors GP, LLC, and certain of their affiliates (collectively, “Macellum”), which own approximately 3.8% of the Common Stock of Citi Trends, Inc. (NASDAQ: CTRN) (the “Company” or “Citi Trends”), issued a letter to its fellow stockholders highlighting the urgent need for immediate and significant change to the composition of the board of directors of the Company (the “Board”) and addressing recent statements made by certain members of Citi Trends’ management and Board in the Company’s March 28th letter.

The full text of the letter can be found below:

Dear Fellow Stockholders,

Macellum Advisors GP, LLC, together with its affiliates (collectively, “Macellum” or “we”), is a large, long-term stockholder of Citi Trends, Inc. (“Citi Trends” or the “Company”), having initially acquired shares in 2016, and currently beneficially owning approximately 3.8% of the outstanding common stock of the Company.  We were disappointed but not surprised to read the Company’s March 28, 2019 letter to stockholders, which we believe materially misrepresented our ongoing efforts to work constructively with the Company to reconstitute the Company’s Board of Directors (the “Board”).  We believe the letter provides a window into the dysfunction and lack of urgency of the existing Board and provides clues as to why an existing director would be forced to formally nominate highly qualified individuals to the Board in the first place.  To be clear, our motivation in putting forth four highly qualified nominees has been to try to improve a Board that is not functioning well in order to address the Company’s prolonged underperformance and poor corporate governance and preserve and maximize value for all stockholders.

As you may know, we previously undertook a successful proxy contest at the 2017 annual meeting of stockholders, resulting in the appointment of Jonathan Duskin to the Board.  Since joining the Board, Mr. Duskin has made considerable efforts to mobilize his fellow directors to implement the changes necessary to deliver stockholder value and create a culture of accountability on the Board.  Unfortunately, despite these persistent efforts, as a single voice on a seven (7) person Board, and a single voice on the six (6) person Nominating and Corporate Governance Committee, the Board has not adopted the meaningful changes we believe are desperately needed at Citi Trends.  Even though the Board agreed it needed to refresh itself not a single director was willing to step down from the Board this year and there is no evaluation process in place to ensure the Board is properly refreshed.

Our many attempts to avoid a public battle were rejected

Over the past several weeks, Mr. Duskin has reached out to the Board and expressed his belief that the Company needs to undertake a Board refreshment.  While the Board agreed a refresh was necessary, the Board has only been willing to increase the size of the Board to add new directors rather than hold itself accountable and replace incumbent long-tenured directors with new highly-qualified, independent directors who would bring much needed fresh perspectives and more relevant experience and skill sets to the Board.

Most recently, we proposed what we believed was an incredibly reasonable compromise to avoid the expense and distraction of a proxy fight.  We proposed that the Board add two new independent directors to the Board for election at the 2019 annual meeting of stockholders (the “2019 Annual Meeting”) – one of Macellum’s nominees and one director candidate that would be mutually agreed upon, which could include one of Macellum’s other nominees.  In addition, in the spirit of moving forward constructively, our proposal suggested that just one incumbent director resign at the 2019 Annual Meeting and an additional incumbent director step down at the 2020 annual meeting of stockholders (the “2020 Annual Meeting”).  This was in response to the Company’s proposal that one of Macellum’s nominees be added to the Company’s slate for the 2019 Annual Meeting and the Board undertake a search for a second independent director to be added by December 31, 2019 without stockholder approval.  The Company’s proposal did not contemplate any incumbent director stepping down from the Board until the 2020 Annual Meeting.

Our most recent proposal was merely an acceleration of the process the Board allegedly wished to undertake, with a further effort to right-size the Board by the 2020 Annual Meeting.  However, much to our disappointment, the offer was summarily rejected, despite the Company’s own acknowledgement that they found Macellum’s nominee, Peter Sachse, qualified to join the Board despite never asking to interview him.  Given the urgent need to address the Company’s underperformance, we cannot find any rational explanation for why the Board would want to delay effecting meaningful changes to unlock stockholder value, which the Board has itself agreed are in the best interest of stockholders.  Instead, the Board seems ready to spend another $2.5 million of stockholder money, to protect incumbent seats on the Board, after it spent approximately $2.5 million during the 2017 proxy fight.  Is spending upwards of $5 million worth it to stockholders to keep the status quo?  We do not think so.   

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Macellum formally nominated four highly qualified director candidates for the Board’s consideration because theBoard demonstrated no sense of urgency in refreshment

Macellum’s motivation for nominating four director candidates has been to refresh the Board with the most highly qualified directors.  Because Mr. Duskin is only one of six directors on the Nominating and Corporate Governance Committee, his voice was continually marginalized forcing us to nominate to preserve our rights as stockholders.  Mr. Duskin’s extensive consumer and retail experience enabled Macellum to present a selection of four exceptional candidates for the Board’s consideration to which the Company may not have otherwise had access and which we hoped would save the Company both the time and expense of hiring a search firm.  Nevertheless, in the interest of working with the Board, Mr. Duskin was still initially willing to go through a search firm to identify other candidates, to the extent that it was done in a timely and cost-effective manner.  Unfortunately, the discussions quickly devolved into the Macellum proposed candidate versus the candidates the legacy directors hoped to identify in the future.

Not about expense reimbursement

The Board would like stockholders to believe that Macellum is holding out to have our expenses reimbursed.  We assure you that this is not the case.  We believe the Board actually offered us reimbursement as part of their last settlement proposal, however, Macellum rejected this offer because it did not offer the material change that Macellum believes the Company must have if stockholder value is to be created.

Macellum has a substantial amount of capital invested in Citi Trends.  The only way for Macellum to make money is for the value of the stock to rise significantly.  In our view, the only way for the value of the stock to rise significantly is for there to be material change to the status quo on the Board.

Mr. Duskin is an agent of change to create long term value for the stockholders

The legacy directors would also have you believe Mr. Duskin is only focused on short term value.  Mr. Duskin will certainly take credit for aggressively pushing for additional share repurchases and still believes the $80 million cash balance the Company needs is overstated and erroneously derived.  If he was not on the Board, we doubt that any further repurchases would have occurred beyond what the Company was forced to do in 2017 during the last proxy fight.

Mr. Duskin’s role as a director makes it impossible for us to detail the inner workings of the boardroom, however, we ask you to consider the following questions when you assess Mr. Duskin’s contributions as a director:

Prior to Mr. Duskin joining the Board, did the Company

  • issue any guidance, either annual or quarterly?
  • have a long-term, annual growth algorithm?
  • have a long-term earnings per share (EPS) target of $4?
  • initiate a Hispanic focused test store, despite having 200 stores with bilingual signage?
  • have a store growth rate commensurate with the long-term goal to have 800 stores?
  • initiate a cost cutting program?
  • more meaningfully engage with its stockholders and provide any vision about the future of the Company?

Despite Mr. Duskin’s considerable efforts and the progress made during his tenure, it is still not nearly enough change.  Additional operational changes urgently need to occur, but the Board’s willingness to maintain the status quo has been an obstacle to continued progress and meaningful change.

Manipulating facts and misleading statements

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The legacy directors would like stockholders to believe that business has been great and their strategic plan is working.  In reality, last year, earnings before interest and taxes (EBIT) has decreased by 1% despite increasing the number of stores by 3.5% (19 additional stores) and relocating or expanding eight stores. Furthermore, the greater part of EPS growth has been the result of a lower share count and lower tax rate rather than an improvement in the Company’s performance.  Therefore, we think the Company’s claim that EPS has grown by 59% is particularly misleading especially given that it includes $2.5 million of one-time expenses incurred in connection with the prior proxy contest in 2017.  Even though the EPS metric is largely irrelevant because the EBIT is still disappointing, we believe it is still a material misrepresentation.  Perhaps running another contest this year is a way to inflate earnings growth next year.

Disappointing and deteriorating results

Since Mr. Lupo was appointed Chairman of the Board in June of 2018 the total stockholder value has fallen 31%.  Mr. Lupo has been on the Board since the IPO in 2003, is the longest serving director, and has overseen this disastrous underperformance every step of the way.

Most concerning of all are the recent deterioration of results.  Since Bruce Smith was appointed CEO in March of 2018, sales and operating profit have begun a startling slide which appears to be accelerating.  Same store sales have fallen from +3.3% in Q2 2018 to 0.6% in Q3 2018, to 0.2% in Q4 2018, and quarter to date Q1 2019 are down a shocking 8% with management guidance of negative 3% for the quarter.  If management achieves this same store sales guidance it would be the worst quarter since Q4 2015.  Operating profit declines are equally disturbing with Q4 2018 down 9% and Q1 2019 down 10% based on EPS guidance.  There is a clear trend that since former Chairman Ed Anderson left and Mr. Smith assumed the CEO position, the Company’s results are steadily declining.  Clearly, it appears the Board is failing to provide the proper oversight, support and guidance for Mr. Smith to be effective.

Significantly, one year into the Company’s long term growth goal of achieving $4 per share, they are materially behind the annual trajectory.  The Company will fall short of its annual same store sales and earnings growth goal of 3% and 12-15%, respectively, with guidance calling for same store sales to increase 1-2% and earnings to increase 4.5% (as inferred from the Company’s 2019 EPS guidance).  As these results show, the Company struggles to achieve success under the current Board and management configuration.

Perhaps that’s why the Company’s valuation at 3.7x trailing twelve month EBITDA is one of the lowest in the sector.  Largely due to what we believe is lack of confidence that any stockholder or potential investor could have in the Company’s ability to deliver long-term, sustainable growth.

Let’s not lose sight of the long term underperformance

While most of this letter is focused on performance since the Board lost a contested election in 2017, let’s not forget what caused us to engage with the Company in the first place.  Since FY 2009, EBIT has declined from $29.3mm to $25.1mm in FY 2018, or 14%.  Also, the Company has spent $222 million on capital expenditures through Q3 of 2018 which resulted in EBIT dollars per store falling 41% to $45K in FY 2018 from $77K in FY 2009.  Similarly disappointing, same store sales have been flat since FY 2009 and EBITDA margins have declined by 290 bp in FY 2018.  All of this against a back drop of the largest employment gains the core customer has ever experienced.

Macellum owns 18x more stock than Chairman Lupo and 6x more than all the non-executive directors

In the letter, the Company noted that we sold 38,000 shares, or 7% of our entire position, since May 2018.  While this is true, we think it is important to also note that Macellum has purchased every share it owns, and as a manager of outside investor money, Macellum cannot control when investors redeem their investment.  By contrast, no one on the Board has made an open market purchase for years.  Worse, Mr. Lupo has sold over $300K or 30% of his holdings of Citi Trends stock and based on public filings, only owns 27,480 shares despite having served on the Board since 2003.  Additionally, unlike Macellum, Mr. Lupo has total control over his decisions to transact in the securities.  Given Mr. Lupo’s insignificant ownership in the Company, we have concerns that his interests do not fully align with those of the stockholders.

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The path forward

Mr. Duskin has gone to great lengths to work constructively with Citi Trends directors since he joined the Board, as evidenced by our decision to avoid a proxy contest last year and to delay our public announcement of our nomination so we could continue to work with the Company toward an agreement without any distractions or unnecessary attention.  Despite our good faith efforts to come to an agreement and achieve meaningful change on the Board, our settlement offers have been repeatedly rejected, seemingly in an effort to project the jobs of the directors rather than the interests of all stockholders.  In our view, the failure of the settlement conversations boil down to one point: no legacy director is willing to step down from the Board at the 2019 Annual Meeting.  Instead, the Board is only willing to increase the number of directors serving on the Board.  We believe this is simply not sufficient and will not result in the urgently needed change in the boardroom or in the Company’s performance.  Stockholders need change immediately so we can address the Company’s stagnant performance and put the Company on the track to achieve long-term, sustainable, consistent growth.  Mr. Duskin, as a single voice of transformation, cannot create value on his own with the status quo and inertia being so strong on the Board.  The Board must be reconstituted now.

Our preference has always been to work privately and constructively with the Board and we are still hopeful that we can reach a settlement that will create meaningful change.  However, as a significant stockholder with interests that are truly aligned with those of the other stockholders, we are committed to doing what is in the best interest of the stockholders of the Company and will take all actions that we deem necessary to deliver value to all stockholders.

Sincerely,

Jonathan Duskin
Macellum Advisors GP, LLC

CERTAIN INFORMATION CONCERNING THE PARTICIPANTS

Macellum SPV III, LP, a Delaware limited partnership, together with the other participants named herein (collectively, “Macellum”), intends to file a preliminary proxy statement and accompanying White proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of its slate of highly qualified director nominees at the 2019 annual meeting of stockholders of Citi Trends, Inc., a Delaware corporation (the “Company”).

MACELLUM STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.

The “Participants” in the proxy solicitation are Macellum SPV III, LP, a Delaware limited partnership (“Macellum SPV”), Macellum Management, LP, a Delaware limited partnership (“Macellum Management”), Macellum Advisors GP, LLC, a Delaware limited liability company (“Macellum GP”), Jonathan DuskinTheresa R. BackesPaul MetcalfPeter R. Sachse, and Kenneth D. Seipel. As of the date hereof, Macellum GP and its affiliates beneficially own, in the aggregate, 494,019 shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”), including 2,397 shares of restricted stock awarded to Mr. Duskin in his capacity as a director of the Company, which will vest on June 6, 2019, provided Mr. Duskin is a director of the Company at such time, representing approximately 3.8% of the outstanding shares of Common Stock. As of the date hereof, Macellum SPV directly owns 489,010 shares of Common Stock. As of the date hereof, Macellum GP, as the general partner of Macellum SPV, may be deemed to beneficially own the 489,010 shares of Common Stock beneficially owned directly by Macellum SPV. As of the date hereof, Macellum Management, as the investment manager of Macellum SPV, may be deemed to beneficially own the 489,010 shares of Common Stock beneficially owned directly by Macellum SPV. As of the date hereof, Mr. Duskin beneficially owns directly 5,009 shares of Common Stock, including 2,397 shares of restricted stock awarded to him in his capacity as a director of the Company, which will vest on June 6, 2019, provided Mr. Duskin is a director of the Company at such time, and, as the sole member of Macellum GP, may be deemed to beneficially own the 489,010 shares of Common Stock beneficially owned directly by Macellum SPV. As of the date hereof, neither Ms. Backes nor Messrs. Metcalf, Sachse or Seipel beneficially own any shares of the Common Stock.

 

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SOURCE Macellum Advisors GP, LLC

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FXGiants Online Trading Platform Launches Bonus Initiative to Reward Traders

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HAMILTON, Bermuda, Dec. 19, 2024 /PRNewswire/ — FXGiants has recently launched a series of exciting bonuses. Participants on the FXGiants online trading platform can now amplify their trading potential with a broad spectrum of bonuses that are tailored to fit different trading needs. These bonuses not only add extra value but also act as a safety net for traders to explore the financial markets without risking too much.

“Our goal with these deposit bonus options is to empower traders of all levels,” said Christopher Oates, the spokesperson for FXGiants. “Under this scheme, we have diverse categories, including Bonus Maximiser, Booster Bonus, and the Bonus Advantage. These bonuses are designed to provide flexibility to clients as they trade on the FXGiants online trading platform.”

Exploring the FXGiants Bonus Options

The bonus options at FXGiants come with versatile advantages. The Bonus Maximiser provides a full 100% boost on all deposits without limit, whereas the Booster Bonus offers a 40% bonus on all deposits up to $4,000 for traders who want to moderately enhance their capital. On the other hand, the Bonus Advantage provides a 60% bonus on deposits up to $5,000, giving traders a better handle on risk. These bonuses enhance the trading experience on the FXGiants online trading platform.

“At FXGiants, we are committed to a trading environment that meets the evolving needs of our clients,” Oates added. “Our online trading platform is a robust ecosystem designed to support traders with advanced execution, extensive market insights, and continuous improvements. As we move forward, we will keep expanding our offerings to ensure that traders have access to the best resources and support.”

About FXGiants

FXGiants stands out as an international broker providing access to over 300 financial instruments across 6 asset classes. Traders can operate through the popular MetaTrader 4 platform, and benefit from exceptional trading conditions such as competitive spreads, flexible leverage, and fast execution. With deposit boosters, partnership programs, an educational blog, and account types tailored to both novice and experienced traders, FXGiants remains dedicated to delivering a one-stop trading solution.

Terms & Conditions apply. Bonus cannot be withdrawn.

All trading involves risk. It is possible to lose all your capital.

FXGiants is a trade name of Notesco Int Limited; a company incorporated in Anguilla with registration number A000001800 and registered address The Valley, AI2640, Cosely Drive, 1338, AI.

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Website: https://www.fxgiants.com/

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CKGSB Successfully Hosts 2024 MBA Professor Training Program for Western China

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BEIJING, Dec. 23, 2024 /PRNewswire/ — Cheung Kong Graduate School of Business (CKGSB) successfully hosted the Western China MBA Professor Training Program in collaboration with the China National MBA Education Supervisory Committee and Shantou University School of Business on December 17 and 18, 2024. 58 professors from over 40 universities in China nationwide, mostly western China, attended this training.

Since 2007, CKGSB has been aspiring to address the pressing disparities in management education between eastern and western China with its MBA professor training program. As of 2024, the program has trained 372 professors from 155 universities across 22 provinces, 4 autonomous regions, 3 direct-administered municipality in China, indirectly impacting tens of thousands of MBA students.

This year, the training focused on social innovation and business for good, a topic many participating professors found lacking in their day-to-day teaching and research. Professor ZHU Rui (Juliet), CKGSB Professor of Marketing and Director of the ESG and Social Innovation Center, led the training. She introduced how CKGSB has been innovating with the integration of business for good in management education, and how our relevant practice-based course has already helped 2,800+ students integrate ESG into their businesses. Professor Zhu also hosted an interactive workshop with the training’s participants on how they may build this idea into their teaching.

Participants shared in their post-program survey that Professor Zhu’s teaching and her ESG Assessment map gave them a new perspective on how to balance profits and social responsibilities. Many also felt inspired on how to bridge the gap between research and practice.  

Recognized in CKGSB’s 2022 and 2024 ESG and Social Innovation Reports and honored as a finalist for the 2021 China Social Impact Award by the United Nations and British Chamber of Commerce, this program exemplifies CKGSB’s impact in this critical area. Through partnerships with the government, NGOs, and business schools, this initiative has made significant progress in promoting quality education and reducing inequalities.  

For more information on CKGSB’s ESG and social innovation efforts, visit our ESG and social innovation website.

About CKGSB

Established in Beijing in November 2002, CKGSB is China’s first privately-funded and research-driven business school. The school aims to cultivate transformative business leaders with a global vision, sense of social responsibility, innovative mindset, and ability to lead with empathy and compassion (https://english.ckgsb.edu.cn).

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Wirex Adds VEUR and VCHF Stablecoins to its Platform for Seamless Spending

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VADUZ, Liechtenstein, Dec. 23, 2024 /PRNewswire/ — Wirex, a global leader in bridging traditional and digital finance, has announced the addition of VNX Euro (VEUR) and VNX Swiss Franc (VCHF) to its platform. With this integration, Wirex users can now spend VEUR and VCHF directly through their Wirex cards, streamlining everyday transactions and enhancing convenience.

Wirex cards allow users to use VEUR and VCHF in various ways. Whether users receive payments in VEUR and/or VCHF, use them for remittances (including cross-border transactions), or sell digital assets for stablecoins instead of fiat, Wirex provides the simplest solution for spending in real life. Users can instantly convert their stablecoins into fiat currency and send them directly to their bank accounts, catering to those who prefer traditional banking options.

Pavel Matveev, Co-founder of Wirex, said: “We’re excited to welcome VNX Euro (VEUR) and VNX Swiss Franc (VCHF) to Wirex. This addition allows our users to effortlessly spend stablecoins in real life, whether for daily purchases, remittances, or managing their digital assets. At Wirex, our goal is to make digital currencies as convenient and versatile as traditional money, and VEUR and VCHF are another step toward achieving that vision.”

Future Features

Additional features will be rolled out later after the launch, complementing the immediate benefits of VEUR and VCHF. These include loans and high-yield X-Accounts, both of which are growing in popularity among Wirex users. Loans offer a smart and tax-efficient way to access liquidity without selling underlying digital assets. Users can leverage their BTC, ETH, SOL, and other digital assets, as collateral for loans in stablecoins, allowing them to benefit from potential appreciation while accessing funds without triggering taxable events.

X-Accounts provide an opportunity for users to earn industry-leading yields of up to 15% APY on their stablecoin balances, enhancing the overall value proposition of holding VEUR and VCHF within the Wirex ecosystem.

Upcoming Advanced Opportunities

VEUR and VCHF have the potential to become preferred options in Wirex’s advanced trading products, such as Wirex DUO and Wirex Multiply. Notably, Euro-backed stablecoins have already demonstrated significantly higher usage among Wirex users than larger USD alternatives, highlighting strong demand for Euro-denominated trading options.

As Wirex explores adding VEUR and VCHF to these products, it aims to further strengthen its position as a leader in digital finance by offering innovative solutions that bridge the gap between traditional finance and digital assets.

Disclaimer: The term “stablecoin” is used herein in relation to VEUR and VCHF for marketing purposes. The reader however shall understand that VEUR and VCHF are fiat-referenced tokens which are described in more detail in the VNX Gold based Fiat Referenced Tokens (FRT) Terms and Conditions which are available for review at www.vnx.li 

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About VEUR and VCHF

Both VEUR and VCHF are multichain tokens referencing the Euro and Swiss Franc, developed by VNX, generated by a licensed token generator under the Blockchain Act in Liechtenstein. VEUR and VCHF are supported by the reserves ensuring 1:1 parity and represent a reliable digital asset in the crypto world. These tokens combine the stability of fiat currencies with the convenience of crypto, enabling quick, low-cost, and 24/7 accessible cross-border payments while opening new opportunities in DeFi.

About Wirex

Wirex is a prominent UK-based digital payments platform with over 6 million customers spread across 130 countries. It offers secure accounts, making it easy for users to store, purchase, and exchange multiple currencies seamlessly. As a principal member of both Visa and Mastercard, Wirex goes beyond traditional services, embracing the evolving trends of Web3 to provide mainstream access to digital finance and wealth management. Having processed transactions totalling $20 billion, Wirex aims to contribute to the adoption of a cashless society by facilitating straightforward transactions in various currencies worldwide. Wirex is simplifying digital payments, making it more accessible and convenient for people across the globe.

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