A group of Reitmans Ltd. shareholders have released their second letter in two months urging the apparel retailer to address its stagnating value, saying they want to replace two board directors and end the company's dual-class share structure.
The open letter published Wednesday is from Donville Kent Asset Management Inc., Parma Investments Ltd. and an unnamed private investor. They collectively own more than 5.5 million class A shares in Reitmans and another 1.1 million common shares in the company.
In the letter, they reiterated their claim from a May 13 letter that the Reitmans board has demonstrated "consistently poor decision making" around governance issues and ignored their requests to explore how the company could unlock more value for shareholders.
As of May 12, the company's market capitalization was $105 million — lower than its net cash holdings of $158 million, and well below its net worth on paper of $280 million, the concerned shareholders say. This means the business was valued at less than the cash it held.
To boost the way the market perceives the retailer, the shareholders want the company to drop its dual-class share structure and move from the TSX Venture Exchange, "a junior market typically suited for emerging companies," to the main Toronto Stock Exchange.
The hottest trend in Canada’s retail sector this summer appears to be distress — and that’s not a reference to the faded, ripped couture that’s all the rage.
Hudson’s Bay and Saks Fifth Avenue closed all of its doors on June 1, after Montreal apparel business Frank and Oak shuttered its stores. Then, Vancouver clothing brand Oak + Fort filed for creditor protection.
After the second letter was released on Wednesday, Reitmans said it had nothing additional to add to its prior statement.
But the shareholders maintain boosting the company's value has fallen by the wayside because of executive chairman Stephen Reitman and his alleged "complete dominance overboard members."
Reitman is the grandson of the company’s founders, Herman and Sarah Reitman. His family owns, on an aggregate basis, the equivalent of 21.67 per cent of the company's shares, including a majority of the voting common shares.
Stephen Reitman has worked at the retailer for about 50 years and is well into his seventies.
He held the CEO job when the almost 100-year-old business filed for creditor protection in May 2020, citing the COVID-19 pandemic as one of the reasons for its recent woes.
The Montreal-based company rebounded after a restructuring but in order to survive it had to close 160 stores, cut 1,400 employees and dump its Addition Elle and Thyme Maternity brands. Its RW & Co. and Penningtons banners remain.
The shareholders behind the Wednesday letter argue it's now time for the company to collapse its dual-class share structure and graduate to the Toronto Stock Exchange.
They say a TSX listing would elevate Reitmans' profile among investors, including large institutions, result in a more accurate valuation of shares and provide it with more room to grow.
They also want a board shake up and say they are intending to vote against the reappointment of Bruce Guerriero and Daniel Rabinowicz "due to independence issues and a clear misalignment with the interests of all shareholders."
Instead, they'd like to see Jesse Gamble, senior vice-president at Donville Kent Asset Management, and Deborah Honig, president at Adelaide Capital, join the board as independent directors.
In response, Reitmans says its ownership structure has been in place for many years and independent board members have long provided deep expertise to the business.
"We would like to stress in the strongest possible terms our confidence in the performance and objectivity of each of our independent directors and that any allegations that have recently been made impugning the independence of certain of our independent directors are false and wholly without merit," the company said in a statement.
"There should be no doubt whatsoever as to this fact, and (we) categorically reject any assertion to the contrary."
Since their first open letter was sent on May 13, the concerned shareholders say they have racked up support from organizations and people holding nearly 41 per cent of the shares not held by the Reitman family.
This report by The Canadian Press was first published June 11, 2025.
Tara Deschamps, The Canadian Press
