Men’s Wearhouse: Zimmer wanted to regain control

  • Associated Press
  • Tuesday, June 25, 2013 1:36pm
  • Business

NEW YORK — Men’s Wearhouse is shedding some light on why it parted ways with founder George Zimmer.

The men’s clothing retailer said Tuesday that Zimmer seemed to have difficulty “accepting the fact that Men’s Wearhouse is a public company with an independent board of directors and that he has not been the chief executive officer for two years.”

Coming forth with more details on its relationship with Zimmer appeared to please investors, as the chain’s stock rose more than 5 percent in midday trading.

Men’s Wearhouse fired Zimmer from his executive chairman role last week in a terse statement that gave no reason for the abrupt dismissal. But some analysts had speculated then that it may have had something to do with a power struggle behind the scenes.

Zimmer, who resigned from the Men’s Wearhouse board on Monday, handed over the CEO title to Douglas Ewert in 2011.

Zimmer helped build Men’s Wearhouse Inc. from one small Texas store using a cigar box as a cash register to one of North America’s largest men’s clothing sellers with 1,143 locations. The 64-year-old was the face of the company, appearing in TV commercials reciting the slogan, “You’re going to like the way you look. I guarantee it.”

But Men’s Wearhouse said Zimmer — who owns 3 ½ percent of the company’s stock — advocated for “significant changes that would enable him to regain control.” The chain said Zimmer had refused to support Ewert and other members of its senior management unless they gave in to his demands.

The retailer also said Zimmer expected veto power over certain corporate decisions, such as executive compensation, even though it has an independent board committee that sets such policies.

Men’s Wearhouse also said Zimmer, who had initially supported looking at strategic options for its K&G unit, did an about-face and began objecting to the review process. Men’s Wearhouse announced a strategic review of K&G three months ago. The division, acquired in 1999, accounts for about 15 percent of the retailer’s total revenue. It operates stores in largely urban markets that cater to low-income shoppers, who have faced more pressures recently due to the tough economy. K&G has seen a decline in its business.

In addition, Men’s Wearhouse said that Zimmer also reversed course on his opposition to taking the company private, with the retailer saying that he began arguing for a sale of the business to an investment group.

Men’s Wearhouse said its board unanimously agrees that now is not the time to sell the company and that such a move would create risk and not be in shareholders’ best interests. The chain said a going-private transaction would also require it to take on a lot of debt to pay for such a deal.

The company maintains that it was left with no choice but to fire Zimmer, as he had in essence drawn a line in the sand — essentially making the board choose to either continue its support of Ewert and its management team or reinstate Zimmer as the sole decision maker.

Men’s Wearhouse said its board strongly felt that continuing its support of Ewert and the management team was the best choice for its shareholders and workers.

The chain said it didn’t want a total breakdown of its relationship with Zimmer and that its actions were not taken to hurt him. The company said it made “considerable efforts” to try to find a solution that would’ve seen Zimmer continue to have significant involvement with the business, but that he wouldn’t accept anything other than full control of the company.

Last week, Zimmer said in a written statement that over the past several months he and the board have disagreed about the direction of Men’s Wearhouse. At the time, Zimmer said that the board chose to silence his concerns.

Beyond creating a successful company, Zimmer is known as something of a cowboy in the business world.

He brought in spiritual leader Deepak Chopra as a member of the board in 2004. He put his fortune to work behind California’s failed Proposition 19 in 2010, which would have legalized marijuana in California, where he lived. And Men’s Wearhouse didn’t conduct criminal background checks on new hires because Zimmer believed that everyone deserves a second chance.

Like many clothing retailers, Men’s Wearhouse saw its sales and profits battered during the Great Recession, but over the last two years, the company’s business has been recovering. For the latest year ended Feb. 2, revenue rose more than 4 percent to $2.48 billion. Net income rose over 9 percent to $131.7 million.

Shares of Men’s Wearhouse climbed $1.87, or 5 percent, to $37 in midday trading. The stock has traded between $25.97 and $38.59 over the past year.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.