NEW YORK – The Warnaco Group’s attempts to avoid the glare of the consolidation spotlight were dealt a serious blow Monday when Barington Capital said it had acquired a 5.6% stake in the company and intends to press for numerous changes to unlock shareholder value.
Barington, an activist hedge fund which specializes in underperforming small- and mid-market firms, said it believes Warnaco should explore a sale of numerous nonessential assets or possibly the whole firm and also pressed for improvements in margins. And it held the firm’s management to task for recent miscues, including financial restatements prompted by accounting improprieties at its Chaps unit; missed financial targets and a glitch-ridden computer system, as well for stock-option and restricted-stock grants to executives that Barington believes are excessive..
Warnaco, recently viewed as a possible takeover target for Phillips-Van Heusen, said it was open to explore “ideas designed to enhance shareholder value” and would review any of Barington’s suggestions.
In recent months, Barington has asserted its equity muscle by pushing for change at automotive retailer Pep Boys, where it gained four seats on the board, and also in the appointment of an independent director at Steven Madden Inc.
Barington’s investment, and the likelihood that it will force change on Warnaco either voluntarily or involuntarily, helped boost shares of Warnaco 72 cents, or 3.9%, to $19.19 in New York Stock Exchange trading Monday. While that price is the highest Warnaco has traded at since it hit $19.28 on July 6, it’s 32% lower than the 52-week high of $28.22.