SYMS IS OFF PRICE
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Spring officially begins soon, but shares of Syms are still in winter clearance mode.
The Secaucus, NJ-based off-price clothing chain’s stock has taken a beating during the past few months, as a controversial plan by management to delist the company’s shares from the New York Stock Exchange made investors skittish.
The retailer has since backtracked, relisting its shares on the Nasdaq and saying it will continue to make regular public filings that it had complained were a waste of time and money. But its shares still haven’t recovered, and some observers are citing the diminished trust between management and shareholders.
Syms shares closed at $16.97 on the NYSE the day before the company announced its plans on Dec. 21. After an initial plunge of more than 40 percent that wiped out more than $100 million in market capitalization, the shares have continued to limp. Yesterday, they closed at $11.57, off nearly a third from pre-announcement levels.
“Syms shareholders may have lost trust in the company due to the decision to go dark,” shareholder watchdog RiskMetrics Group concluded in a recent report, and “reasonably may wonder what the board has in store for them next.”
Syms, which declined to comment, had previously cited the costs of complying with Sarbanes-Oxley accounting rules. But that may have served as “a very convenient excuse” for a company that was looking to take itself private on the cheap, said Steven M. Davidoff, a law professor at Wayne State University.
The retailer’s nationwide chain of more than 30 locations is thought to contain valuable real estate holdings, including its Trinity Place store in Manhattan’s financial district. In spring 2006, the company announced a tender offer at $18 a share to be taken private, which found few takers.
Accordingly, not all investors are convinced that the recent controversy is a long-term problem for the shares. Thomas Graham Kahn, president of Kahn Brothers, says his money-management firm has a position in Syms because “the real value is in the real estate.”