Welcome!

News Feed Item

Eminence Capital Sends Letter To Board Of Jos. A. Bank Clothiers, Inc.

Calls Eddie Bauer Acquisition A Poor Strategic Fit Designed To Protect Management's Jobs and Paychecks

NEW YORK, Feb. 18, 2014 /PRNewswire/ -- Eminence Capital, LLC, which owns 4.9 percent of the common stock of Jos. A. Bank Clothiers (NASDAQ: JOSB), today sent the following letter to the Board of Directors regarding their announced acquisition of Eddie Bauer.

February 18, 2014

Dear Jos. A. Bank Clothiers, Inc. Board of Directors:

With the announcement of an agreement to acquire Eddie Bauer you have confirmed the suspicions we feared most and laid out in our recent lawsuit: the management team and board of Jos. A. Bank are willing to engage in desperate tactics in an effort to protect their jobs and paychecks in blatant disregard for the best interests of shareholders. 

We write this letter as a 4.9 percent shareholder with ownership of more than 1.37 million shares reflecting an economic interest very much in contrast to the Board. Collectively the entire seven member board of Jos. A. Bank owns approximately 269,000 shares, representing ownership of less than 1 percent of the company. Perhaps it is this lack of alignment with shareholders that explains your strategy to date of entrenchment rather than one of maximizing shareholder value.

We firmly believe that the acquisition of Eddie Bauer for nearly $900 million (inclusive of fees and expenses) is a poor strategic decision for Jos. A. Bank at a price that is in our view excessive and almost surely destroys shareholder value. This "bet the company" strategy on Eddie Bauer – a company which we believe offers minimal product or customer overlap and effectively no credible synergies – defies industrial logic in our opinion. More than 40 percent of Eddie Bauer's sales are to women and virtually all of its products are outside of Jos. A. Bank's core men's tailored clothing segment. Additionally, through this acquisition the company will enter more discretionary and fashion oriented categories in retail apparel, thereby significantly increasing the company's risk profile. You have agreed to pay what amounts to 14x trailing EBITDA and 19x trailing EBIT (a near 100 percent premium to Jos. A. Bank's own unaffected trading multiple)¹ for a company that offers little strategic benefit and was bankrupt less than four years ago. We calculate that this transaction is dilutive to the company's trailing earnings per share exclusive of synergies, a troubling fact given the low current financing rates. 

The company has issued what we frankly believe is suspect and misleading financial guidance in an effort to justify its actions. Pro forma EBITDA for 2013 for the combined Jos. A. Bank / Eddie Bauer is approximately $200 million², yet company projections for 2015 earnings are based on a combined EBITDA of $330 million. That amounts to a $130 million improvement despite only receiving a $25 million benefit from purported synergies. The Jos. A. Bank Board is essentially asking shareholders to close our eyes and trust this miraculous EBITDA improvement of more than 50 percent, despite lacking any credible basis in our opinion. Underlining our skepticism are the historical facts, starting with the fact that reported EBITDA is essentially flat over the past four years and concluding with Jos. A. Bank's recent announcement of yet another disappointing quarter.  

Finally, the announced transaction has two other features that in our view are destined to destroy shareholder value even further. If the Eddie Bauer transaction proceeds, Jos. A. Bank will issue 4.7 million shares of stock to Golden Gate at $56 per share only to repurchase nearly the same number of shares from the market at $65 per share, directly destroying more than $40 million of value. How is this consistent with the Board's fiduciary duty to maximize shareholder value? Alternatively, if a "superior proposal" is received, you have agreed to give Golden Gate Capital a $50 million break-up fee (a very high 6 percent fee), money that might directly come out of shareholders pockets. Quite a good deal for Golden Gate's investors, and an exceptionally poor outcome for Jos. A. Bank shareholders.  

Your actions and behavior surrounding the offer made by The Men's Wearhouse and subsequent decision to enter into an agreement to purchase a completely unrelated business like Eddie Bauer demonstrate to us and the rest of your shareholders a total and complete disregard for your principal role: serving as a steward for shareholders in maximizing value. Not only have you turned your back on an acquirer prepared to pay a substantial premium for the company but you plan to deploy significant and valuable company resources into a troubling and risky sector of the retail and apparel industry in which you have absolutely no experience. In our view these decisions defy any sense of sound business judgment. To us, they appear designed for the sole purpose of keeping this management team and board employed.  

Make no mistake about it – we intend to hold the Board accountable for its actions both through the upcoming proxy vote and through direct actions in court.

Best regards,

Eminence Capital, LLC

/s/ Ricky C. Sandler

Ricky C. Sandler
Chief Executive Officer

Sources:

1.

Capital IQ, Jos. A. Bank Investor Presentation dated February 14th, 2014, 10-Q for the period ending August 3rd, 2013

2.

Jos. A. Bank Investor Presentation dated February 14th, 2014

Additional Information Regarding the Proxy Solicitation
In connection with its solicitation of proxies for the 2014 Annual Meeting of Jos. A. Bank Clothiers, Inc. ("JOSB"), Eminence Capital, LLC intends to file a proxy statement on Schedule 14A and other relevant documents with the SEC. Investors and security holders are urged to read the preliminary proxy statement in its entirety and the definitive proxy statement and other relevant documents when they become available, because they will contain important information regarding the proxy solicitation. The preliminary and definitive proxy statement and all other relevant documents will be available, free of charge, on the SEC's website at www.sec.gov.

The following persons are participants in any such proxy solicitation: Eminence Capital, LLC, Eminence GP, LLC, Ricky C. Sandler, Bruce J. Klatsky and Norman S. Matthews. Investors and security holders of JOSB can obtain additional information regarding the direct and indirect interests of the participants by reading the materials to be filed today under cover of Schedule 14A with the SEC.              

About Eminence Capital, LLC
Eminence Capital, LLC is an asset management firm founded in 1998 that currently manages approximately $4.9 billion on behalf of institutions and individuals. The firm employs a bottom-up, research-driven investment strategy that utilizes a combination of industry research, rigorous financial analysis and dialog with company management to execute its investment process.

For More Information Contact:
Scott Tagliarino/Samantha Leon
ASC Advisors LLC
(203) 992-1230

SOURCE Eminence Capital, LLC

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
SYS-CON Events announced today that Dataloop.IO, an innovator in cloud IT-monitoring whose products help organizations save time and money, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Dataloop.IO is an emerging software company on the cutting edge of major IT-infrastructure trends including cloud computing and microservices. The company, founded in the UK but now based in San Fran...
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, sha...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
Much of the value of DevOps comes from a (renewed) focus on measurement, sharing, and continuous feedback loops. In increasingly complex DevOps workflows and environments, and especially in larger, regulated, or more crystallized organizations, these core concepts become even more critical. In his session at @DevOpsSummit at 18th Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, showed how, by focusing on 'metrics that matter,' you can provide objective, transparent, and meaningful f...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
An IoT product’s log files speak volumes about what’s happening with your products in the field, pinpointing current and potential issues, and enabling you to predict failures and save millions of dollars in inventory. But until recently, no one knew how to listen. In his session at @ThingsExpo, Dan Gettens, Chief Research Officer at OnProcess, discussed recent research by Massachusetts Institute of Technology and OnProcess Technology, where MIT created a new, breakthrough analytics model for ...
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
@DevOpsSummit at Cloud taking place June 6-8, 2017, at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long developm...
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera MyS...
"We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
"We are an all-flash array storage provider but our focus has been on VM-aware storage specifically for virtualized applications," stated Dhiraj Sehgal of Tintri in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.