You wouldn’t expect turmoil coming out of a company that just experienced a 23 percent uptick in profits over the year. But Men’s Wearhouse (MW) certainly has been, getting into a very public, very ugly spat with their founder and advertising pitchman George Zimmer.
The imbroglio began when the Board voted to oust Zimmer as Executive Chairman on June 19th. Then, in an unusual move on June 25th the Board released a terse press statement outlining their grievances against him. These included his desire to take the company private, his refusal to support the management team, and demands that he be given veto power over board decisions.
Zimmerman, who still retains 3.5 percent of the company, quit the Board and issued a response. In it, he maintains that the Board acted in bad faith, maintaining that they “quickly and without the assistance of financial advisors simply rejected the idea (of going private)… and instead took steps to marginalize and then silence me.” He continued lambasting the Board, writing that, “(T)he directors were more concerned with protecting their entrenched views and positions than considering the full range of possibilities that might benefit our shareholders and indeed all our stakeholders.”
A founder being let go from his own company is usually bad news, but the PR problem for Men’s Wearhouse is exacerbated by the fact that Zimmer is the company’s well known face and voice. Zimmer was famous for his catchphrase “you’ll like the way you look… I guarantee it” and while the company will retain the usage of his persona for some time, Zimmer will eventually disappear from their publicity. Though Zimmer, famous for being a outspoken iconoclast, is sure not to disappear from the public eye.
Despite fallout over the ouster, and concerns the men’s clothing retailer aren’t gaining enough traction in the 18-34 year old male demographic, Men’s Wearhouse stock is way up over the last year. Though their stock dropped 0.75 percent to close out at $36.85 a share, it has gained over 26 percent from a year ago.