A large Jos. A. Bank Clothiers shareholder on Tuesday lambasted the retailer’s plans to buy outdoor apparel retailer Eddie Bauer as “desperate tactics” by the company’s executives and board to hold onto their jobs at the expense of shareholders.
Ricky Sandler, CEO of New York hedge fund Eminence Capital LLC, said in a letter to Jos. A. Bank’s board that the deal “to purchase a completely unrelated business” demonstrates “a total and complete disregard for your principal role: serving as a steward for shareholders in maximizing value.”
Jos. A. Bank announced Friday its deal to acquire Eddie Bauer for $825 million.
Sandler has been pushing Hampstead-based Jos. A. Bank to accept a $1.6 billion buyout offer from rival Men’s Wearhouse. Eminence is Men’s Wearhouse’s largest shareholder with a stake just under 10 percent. It also owns 4.9 percent of Jos. A. Bank, or more than 1.37 million shares.
Sandler, in his letter, said that Jos. A. Bank’s “bet the company” strategy to buy Eddie Bauer is risky because 40 percent of Eddie Bauer’s sales come from women’s clothing, an area that is “outside of Jos. A. Bank’s core men’s tailored clothing segment.” The deal also exposes Jos. A. Bank to more risk because Eddie Bauer’s clothing is also more of a discretionary purchase.
Jos. A. Bank said the acquisition would expand its offerings, bring in new customers, including women, and result in about $25 million in cost savings. A Jos. A. Bank spokesman could not immediately be reached for comment.
Eminence filed a lawsuit in Chancery Court in Delaware in an attempt to block Jos. A. Bank from making an acquisition that would lessen the chances of Men’s Wearhouse buying the company. Eminence filed an amended complaint on Feb. 4 even before Jos. A. Bank announced a deal to buy Bellevue, Wash.-based Eddie Bauer.