New York -- Jos. A. Bank Clothiers on Tuesday came under criticism from BeaconLight Capital LLC, which owns more than 1% of the men’s apparel chain. In an open letter to the company’s board, the investment manager called for a reorganization of the retailer's board and return of cash to shareholders, preferably through buy-backs. The letter stated that "we are convinced that tremendous value is trapped inside the company due to the absence of a credible capital allocation policy, an insular insider board of directors, poorly aligned management incentives, and the company's refusal to communicate with shareholders."
The letter noted that Jos. A. Bank’s stock has underperformed the S&P Retail Index by 5%, 116%, and 40%, in the last five, three and one year periods, respectively.
“While we appreciate the role that current leadership played in building the company from a sleepy 100-store regional retailer to a national 600-store company with over $1 billion in sales, they have delivered increasingly dismal total shareholder returns over the last five years,” BeaconLight wrote.
BeaconLight said that with the changes it proposed, the stock should be worth $70 per share. The hedge fund also said in the letter that "the market is heavily penalizing the company for its inefficient use of cash and exceptionally poor corporate governance."