The Barington Group now collectively holds approximately 5.6% of the common stock of The Warnaco Group, Inc. The Barington Group consists of Barington Capital Group, L.P., Ramius Capital Group, L.L.C. and various other affiliated entities.
In its Schedule 13D filing with the SEC, Barington stated that it believes Warnaco to be undervalued and that it wishes to engage in discussions with the Company’s senior management concerning measures that it believes will improve shareholder value for the benefit of the Company’s stockholders.
In its filing, Barington said such measures include, but are not limited to:
- the improvement in execution by the Company’s senior management team
and oversight provided by its Board of Directors in light of what
Barington believes to be a string of recent operating disappointments
stemming from (a) the recently announced financial restatement caused
by accounting issues at the Company’s Chaps division and swimwear
segment, and the resulting Securities and Exchange Commission informal
inquiry, (b) disruptions and excess costs associated with poor
implementation of SAP at the Company’s swimwear segment, and (c) missed
revenue growth and gross margin targets; - a substantial reduction in equity grants, including stock options and
restricted stock, which have averaged 5.0% annually or a staggering
17.6% cumulatively of the Company’s shares outstanding over the past
three and one-half fiscal years; - the improvement in gross and EBITDA margins, which currently trail peer
averages by approximately 800 and 600 basis points, respectively,
through a reduction in SG&A and corporate expenses and better
merchandising; - the disposition of non-core brands and licenses, especially in
underperforming divisions of the Company’s intimate apparel and
swimwear segments; and - the exploration of alternatives, including, without limitation, the
possible sale of the Company.
