Showdown Expected at Venator Meeting
Jul. 12, 1999
NEW YORK (AP) _ It changed its name from Woolworth, lost its five-and-dime image, closed thousands of stores and built itself into a sporting goods giant.
But retailer Venator still seems to be limping along. Sales and profits are down, and its stock price _ while improved this year _ still stands at under $10 compared to more than $28 two years ago.
Now, its biggest shareholder, Greenway Partners, is charging that the company's management isn't doing enough to get the troubled retailer back on track.
A big showdown between the sides is expected this Friday, when Venator holds its annual meeting in Florida _ an event that many think will be nothing less than downright nasty.
Despite Venator's contention that its turnaround is on track, Greenway, a New York-based investment firm, will try at the meeting to snatch away four director seats. Greenway also will try to convince shareholders to change the corporate name back to Woolworth and loosen the company's defenses against a takeover.
``The name Venator was an ill-chosen name to begin with. The company's value continues to be in question and the whole turnaround seems to be taking an awfully long time,'' said Kurt Barnard, president of the retail newsletter Barnard's Retail Trend Report. ``No wonder Greenway is aggravated.''
It's been a tough few years for Venator, which has attempted to boost profits by reducing costs and closing more than 4,000 stores _ including the entire chain of Woolworth dime stores and all of its Kinney Shoe stores.
It is now mostly a sporting goods chain, with stores including Foot Locker and Champs Sports. It also runs Northern clothing stores, the San Francisco Music Box and Afterthoughts, which sells accessories.
But Venator _ which means hunter in Latin _ continues to struggle, and analysts think it is unlikely that its business will turn around soon given the prolonged slump in the sporting goods market _ with shoppers buying far fewer sneakers than earlier in the decade.
According to The NPD Group, a market research firm, athletic footwear revenues fell by 6.3 percent in 1998 from the year before.
``Their core product _ athletic footwear _ is going downhill, so how can they really even think that they will be able to revive this company soon,'' Barnard said.
Greenway owns more than 14 percent of Venator's stock and has been one of the company's most vocal critics.
On Friday, Greenway will ask shareholders to elect its four nominees to the 11-member Venator board instead of the four nominated by the company. It is the first time that Greenway has sought board representation.
``We would like to be on the inside to see why this company has done so poorly,'' said Alfred Kingsley, senior managing director at Greenway. ``We have a lot at stake here and want to get some answers.''
In asking to have the Woolworth name reinstated, Greenway executives say giving up such a well-known name shows a lack of marketing savvy.
In addition, Greenway wants Venator to scrap its ``poison pill'' _ a provision that discourages hostile takeovers _ and put any future poison pill proposals to a shareholder approval vote.
Lastly, Greenway is angered that Venator is holding its annual meeting at an out-of-the-way location _ the headquarters of its Champs subsidiary in Bradenton, Fla.
Greenway has been aggressive about publicizing its troubles with the company. It mailed out letters to shareholders attacking corporate performance and management perks. Greenway also distributed buttons saying ``Bring Back Woolworth'' at the company's New York headquarters.
While Venator executives declined to be interviewed for this story, the company has made numerous filings with the Securities and Exchange Commission that defend its actions.
In a filing on June 21, the company said that its stock is up sharply this year, and its executives ``believe it is very important to continue the momentum Venator's strategic plan has generated.'' Venator shares have gone from a low of just under $4 in February to about $10 now.
Venator said that it doesn't find Greenway's ``suggestions to be beneficial to the company or the value of its shares. In fact, in some cases, we believe their proposals could be detrimental to the company.''
As for the name change, Venator said in a July 2 filing that 80 percent of its shareholders voted for the name change at last year's annual meeting and that Greenway's proposal is indicative of its ``limited viewpoint and lack of strategic focus.''
In the same filing, Venator urged its shareholders to ``send a clear message to Greenway: it's time to let Venator pursue its business plan and deliver value to all shareholders without further cost and distraction.''