NEW YORK — The Jones Group Inc. is about to get a fresh and analytical eye to help rejuvenate its business.
Investor James Mitarotonda, chairman and chief executive officer of Barington Capital Group, is set to become a director of the company at its annual meeting today.
That will expand the number of directors on Jones’ board to 11 and bring inside an investor who has taken stakes in and advocated for change at The Warnaco Group Inc., Dillard’s Inc., Nautica, Harry Winston and others.
Barington, which controls about 2.3 percent of Jones’ stock, is seen as a constructive activist, which seeks to work collaboratively with the management of undervalued firms that need sprucing up. Barington has also proven its willingness to go directly to shareholders to try to bring about change it wants. The investor was part of a group that went several rounds with Dillard’s before the staid department store agreed to take on new board members.
“I do think he was very helpful in challenging the Dillard’s board and the Dillard’s way,” said retail veteran Allen Questrom, who knows Mitarotonda and has himself led turnarounds at J.C. Penney Co. Inc., Macy’s and Barneys New York. “He’s helped the Dillard’s company, the Dillard’s family.”
Dillard’s did not return a request for comment on its experience with Barington.
Questrom said activist investors can challenge the status quo at a company and are not always welcome, but can also open people’s eyes if they are analytical in their approach, as Mitarotonda is.
“If you have a company that’s not doing well and it has not done well for several years, I would welcome somebody like that, who I believe is analytical and looks at lots of different companies,” Questrom said.
Mitarotonda, who cofounded Barington in 1991 and got his start in the Bloomingdale’s executive training program, might serve as a catalyst at Jones, as he did at Warnaco.
Barington led a group that bought 5.6 percent of Warnaco in 2006 and urged, among other things, that the company explore the disposition of its underperforming intimates and swimwear businesses.
Joseph Gromek, former president and chief executive officer of Warnaco, said he met with Mitarotonda several times that summer. And while many of his suggestions were things Warnaco was already considering, he added some fuel to the fire.
“With Jim leaning on us, we probably took action a little sooner rather than later,” Gromek said. “I find Jim to be a straightforward, solid business guy. He was not unpleasant to deal with. In the end, we implemented some of the suggestions he had….And I think all of our shareholders did very well, including Barington. Jim was constructive, he was not destructive.”
Mitarotonda helped Warnaco trim some of its brands and focus in on its larger businesses, such as Calvin Klein.
Similar steps could be taken at Jones, which has 35 brands, but just six that it considers core, including Nine West and Jones New York, and six that are “emerging,” such as Stuart Weitzman and Kurt Geiger.
Analyst Janet Kloppenburg, said Jones has some “fantastic brand franchises” and could do more with them.
“The problem is that you don’t have the legacy brands generating the kind of profitability that would enable you to deliver industry-average, top- and bottom-line growth and then you could fuel these newer businesses,” Kloppenburg said.