(Recasts with Chico's statement it will review proposal)
By Greg Roumeliotis and Harry Brumpton
June 19 (Reuters) - Chico's FAS, Inc said on Wednesday it plans to review a new buyout offer from private equity firm Sycamore Partners that lowered an earlier unsolicited offer.
Sycamore disclosed in a regulatory filing on Wednesday that it had lowered its offer for Chico's to $350 million in cash because of the U.S. women's apparel retailer's deteriorating financial performance.
It was the second time Sycamore lowered its bid this year. Last month Chico's rejected an offer from Sycamore for $3.50 per share after previously having turned down a higher offer of $4.30 per share.
Since then, Chico's reported a drop in quarterly cash flow and lowered its earnings outlook for the year. Sycamore's latest offer is for $3 per share. Chico's stock rose 2.3% to $3.18 on Wednesday.
Chico's noted that the company board had unanimously rejected the first bid after determining the proposal substantially undervalued the firm and was not in the best interests of shareholders.
"Numerous Chico's FAS shareholders have expressed to management that they support the Board's previous decision to reject Sycamore's proposal and share the view that Sycamore's proposal is inadequate," a statement from the company said on Wednesday.
Among the Chico's shareholders backing management's stance on the bid is fund manager Neuberger Berman, according to people familiar with the matter.
Sycamore said it may improve the offer, but only if due diligence could show Chico's turnaround efforts were achievable.
"Your most recent full-year guidance requires a significant improvement in performance trends and an increase in EBITDA (cash flow) of $10 million, or 25%, in the second half of the year," Sycamore Managing Director Stefan Kaluzny wrote in a letter to Chico's Chairman David Walker.
Chico's, which is known for its Soma brand of women's intimate apparel, operates more than 1,000 stores in the United States and Canada and sells its merchandise online.
The 36-year-old retailer, which has been struggling with lower sales for the last three years, has been looking for a new chief executive officer after Shelley Broader abruptly resigned in April.
Bonnie Brooks, the former CEO of department store operator Hudson's Bay Co, has been serving as Chico's interim CEO since April.
The company told analysts this month its CEO search was progressing ahead of plan.
Chico's has struggled along with many other brick-and-mortar apparel retailers that have been undercut by the continued growth of internet shopping.
Chico's has persuaded some analysts that further improvement is possible after remaking its product lines and store layout to draw more shoppers while continuing to aggressively trim costs.
While the Chico's core brand has been struggling not to shrink, one bright spot has been Soma, which generates nearly one-third of revenues and has helped the retailer ride one of the faster-growing apparel categories by boosting sales in recent quarters. (Reporting by Greg Roumeliotis in New York; editing by Jeffrey Benkoe and Tom Brown)