March 11, 2015 / 9:24 PM / 5 years ago

UPDATE 1-Funds urge Children's Place to improve results, explore sale -source

(Adds details from investors, sourcing)

By Olivia Oran

March 11 (Reuters) - Activist hedge funds Barington Capital Group LP and Macellum Advisors GP LLC are urging specialty retailer the Children’s Place Inc to improve its operating results and to explore a potential sale, the funds said in a letter addressed to the company’s board.

The investors, who own a combined 2 percent of the Secaucus, New Jersey-based retailer, say the company should look at improvements in its sales and margins, inventory management and capital allocation. They also called on Children’s Place to add new independent directors to address executive compensation packages, which they believe are too high.

Children’s Place could more than double its earnings per share within the next three years under the right management team, the investors said.

The company’s share price, which has increased 12 percent in the last year, has underperformed peers like Carter’s Inc as well as the broader retail market, the investors added.

“As significant shareholders of the company, we are extremely disappointed by the Children’s Place financial and share price performance and believe that it is time for decisive action and change at the company,” they said.

A representative for Children’s Place could not be immediately reached for comment.

Barington Capital, led by James Mitarotonda, has pushed for change in several retail companies including Darden Restaurants Inc, Warnaco, Dillard’s Inc and the Jones Group Inc.

Macellum Advisors, formed in 2009 by Jonathan Duskin, is focused on investments in the consumer and retail sectors.

The Children’s Place is the largest children’s focused specialty apparel maker in the U.S. The company operated 1,117 stores within the United States, Canada and Puerto Rico as of Nov. 1, 2014 and had 67 international stores open and operated by its franchise partners. (Reporting by Olivia Oran in New York; Editing by Alan Crosby, Bernard Orr)

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