Legion Partners Asset Management, which owns about 2.5 percent of the business, sent a letter to the board Monday, arguing that Guess remains at risk while co-founders Paul and Maurice Marciano are still involved, according to a statement released Tuesday.

The Marcianos founded the denim apparel brand in 1981. In recent years, Paul Marciano has been accused of sexual misconduct by several women, including a former employee and the model Kate Upton. Marciano stepped down as the company’s executive chairman in June 2018, and the company opened an investigation. It eventually reached a settlement of $500,000, but Marciano was reinstated to the board in 2019, and still serves as the company’s chief creative officer.

”We do not believe that Guess will ever be able to reach its full potential with the persistent overhang of legal, reputational and moral risk that accompanies the Marciano brothers remaining on the Board or continuing to serve in any role inside the Company,” Legion Partners wrote in its letter.

Guess responded to the Legion Partners letter in a statement Tuesday evening. The company said that under its current leadership, which includes Marciano serving as creative chief officer, Guess has “been executing on a clear strategic plan to elevate the Guess and Marciano brands,” and that “it is today supported by a strong balance sheet and solid cash flow generation to propel our growth.” Regarding accusations against Marciano, Guess said “it has strongly refuted these claims and is contesting them vigorously.”

In its letter, Legion Partners highlighted allegations that surfaced after Marciano was reinstated to the board. In January 2021, a model filed another lawsuit against Guess, accusing Marciano of sexual assault in an incident in February 2020. The investors also wrote that Guess’s insurance carrier recently sued the company to absolve itself of any obligation in covering claims about Marciano’s alleged behaviour.

Editor’s Note: This story was updated on 8 February 2022 to include a statement from Guess.

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