George Zimmer, founder and former executive chairman of Men’s Warehouse Inc. (NYSE: MW), likely can take back control of the retailer. And he does not have to look far for allies that can help him do it, and quickly.
Zimmer was dumped from his management position by a board, all of whom joined the company since he founded it in 1973. He then resigned as a member of the same board, and he is rumored to be considering a coup to get the company back. This might include a private equity transaction. But he has a more direct way to accomplish the goal of regaining control. A few institutions together hold a very big block of Mens’ Warehouse shares. Given the strength of both the retailer’s stock and earnings, these institutions should be inclined to help Zimmer return.
Zimmer’s holdings are small. He owns 3.5% of the outstanding shares. But BlackRock Inc. (NYSE: BLK) holds 8.4%, according to the most recent Men’s Warehouse proxy. The Vanguard Group owns 5.4% and Piper Jaffray owns 5.3%. If 22.6% of the company’s share vote against the current slate of directors, it would be difficult for these members to stay in place. Other institutions that own Men’s Warehouse shares likely would follow suit in a vote against the directors and for a slate put up by Zimmer.
Big investors have to be deeply worried about the future of Men’s Warehouse. Not only has the company spent tens of millions of dollars over the years to establish Zimmer as its spokesman and the face of the brand. There has been a revolt among many Men’s Warehouse customers, some of whom will go elsewhere to shop. Fairly soon, that will hurt both sales and share price.
No one has said exactly why the board at Men’s Warehouse rid itself of Zimmer. However, his return will not be very difficult. All Zimmer needs is a few friends.