A major shareholder’s contention that Forzani Group Ltd. needs some new blood on its board of directors will be tested this week, when the sporting goods retailer holds its annual meeting.
Crescendo Partners L.P., which owns 5.1% of Forzani’s shares, has been pushing for two of its nominees to be elected to the company’s eight-member board of directors at the meeting in Calgary tomorrow.
Eric Rosenfeld, Crescendo’s managing member, said the retailer has not delivered on a goal set out in 2003 to reach $1.8 billion in sales by 2008, instead bringing in $1.3 billion during that fiscal year.
“They set these targets, they did not meet them. And we think that by having new people on the board that there can be a change,” Rosenfeld said in an interview from New York on Monday.
“We think that a sense of urgency is needed at the board and we hope to see that sense of urgency created at the board level as a result of our efforts.”
Crescendo backs most of Forzani’s board nominees, with the exception of former Rona chairman Henri Drouin and Donald Gass, who retired last year as a partner from Deloitte & Touche. Instead, Crescendo wants Barry Erdos and David Sgro on Forzani’s board.
Erdos was appointed CEO of toy retailer FAO Schwarz in March, and has served in executive roles at U.S. merchants Ann Taylor and J. Crew.
“We think that Barry will bring a new set of eyes to look at what’s going on at the company,” said Rosenfeld.
Sgro, a managing director at Crescendo partners, would bring financial market experience to the table, Rosenfeld added.
Forzani chief executive Bob Sartor called Crescendo’s campaign a “farce.”
“We have been changing, but we’ve been doing it intelligently. We went out and through a deliberate process recruited people who could benefit the company,” he said, noting the company has replaced half of its independent directors over the past four years.
“The two nominees that [Crescendo] put forward, in my view, could not have been more ill-suited for our company.’’
In April, Forzani laid out a five-year strategy, aiming to increase sales by 10%, and earnings per share and dividends by 20%.
Among other initiatives, Forzani would increase the average size of its Sport Chek outlets by 5,000 square feet, incorporate concept shops like Nevada Bob’s Golf into Sport Chek locations and reduce the company’s banner count to boost efficiency and cut overlap.
Rosenfeld said the new plan has some “commendable” elements.
“However, some of them are the same things that they said that they were going to do six years ago. Why aren’t they done yet?” he said.
Forzani owns more than 560 stores across Canada under 16 different banners, including Sport Chek, Athletes World and Coast Mountain Sports.
