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 Barrington Capital Group LP founder James Mitarotonda knows a thing or two about fashion and apparel having once worked at Bloomingdale's flagship in Manhattan, so it comes as little surprise that his firm is targeting department store chain Dillard's Inc.
Barington and partner the Clinton Group reported in a government regulatory filing that they own 5.3% of the Little Rock, Ark.-based retailer, and they are recommending operational and strategic improvements, such as eliminating its dual-class stock structure, which gives the founding family control over the chain; evaluating its senior management team, which is overseen by the founding family; and shuffling the company's real estate portfolio by closing underperforming properties. The activist funds also would like to see the company complete a sale-lease back of owned properties, a typical tactic considered by activist investors seeking to have corporations raise capital for other purposes such as stock buybacks or special dividends. Barington and Clinton Group sent two letters to Dillard's board in August and a follow up letter on Jan. 29, according to the filing. "The disappointing financial performance of Dillard's must be addressed," Barington wrote. "While we acknowledge that the market conditions in the department store sector have been challenging over the past few quarters due to concerns with a weakening U.S. economy, the magnitude of Dillard's recent weak results cannot be attributed to the economy alone." The activist group says in the filing that it is "committed to taking all actions necessary," which for Barington, in the past, has at times included launching proxy contests to replace directors. Barington and Clinton Group have launched activist efforts at the same company in the past. After Barington launched an insurgency at Steven Madden Ltd., Clinton Group followed up with its own activist effort there. Additionally, Barington's effort at Dillard's follows up on the activist's campaigns at other retailers and apparel companies, including Syms Corp., Payless Shoes, Speedo swimwear, Calvin Klein underwear and jeansmaker Warnaco Group Inc. -- as should be expected of a former Bloomingdale's sales associate. - Ron Orol See January. letter from SEC Edgar
See August 2007 letter from SEC Edgar See Schedule 13D filing from SEC Edgar See joint filing agreement from SEC Edgar See Dealscape: Real estate sale at Dillard's? Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
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