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Venator under pressure
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January 6, 1999: 1:46 p.m. ET
'Activist' investment group ups stake in retailer, may signal changes ahead
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NEW YORK (CNNfn) - The pressure is on for the management team at Venator Group Inc., the cash-strapped retailer formerly known as Woolworth.
Greenway Partners LP, the New York investment partnership that is sometimes credited with the ouster of Unisys Corp.'s chief executive two years ago, raised its stake in Venator Wednesday to 11.9 percent from 9.5 percent.
That's more than double it's position in the company last June.
"We are an activist-type firm," said Alfred D. Kingsley, senior managing director at Greenway. "We like to buy undervalued securities, things that are out of favor, to hopefully improve the situation and enhance shareholder value."
Kingsley declined to comment further on Greenway Partners' motives for upping its ownership stake in Venator.
But analysts say it's clear the investment group wants a louder voice in the company's decision making process.
"Greenway has made it very clear at annual meetings that they are very dissatisfied with the management of this company and obviously they are concerned over the price action of the stock," said Brown Brothers Harriman analyst Donald Trott. "I would presume that their buying represents two things: that they still have confidence in [the stock] and that they are sending a message to [Venator's Chairman and Chief Executive Roger] Farah that they are increasing their ownership and therefore clout with the company."
If Venator can't get its stock valuation back on track, Trott said, the company could become a "potential takeover target."
Greenway eventually could "seek to entice some outside buyer to take over" the company, he said, noting such an event is still far from becoming a reality.
Peter Hynes, a spokesman at Unisys, confirmed that Greenway Partners has been the "most active shareholder over the past several years and certainly the most visible in terms of criticizing management."
He said the company's former chief executive, however, retired in 1997 after the once-struggling company began to regain its footing.
Unisys designs, manufactures and markets computer-based information systems.
Venator changed its name and focus from Woolworth in June to concentrate on the then-robust sporting-apparel market.
Since then, Venator Group has suffered continued losses in an already sluggish athletic footwear market.
"The big thing here is that the athletic footwear market continues to be soft and Ventor is trying to improve their store productivity," said Mark Friedman, an analyst with Merrill Lynch Global Securities. "It's a double negative."
As a symbol of its financial slump, Venator was dumped from the S&P 500 list in late December and replaced with America Online, the Internet service provider whose stock has been on steroids for the better part of a year.
Going off the S&P 500 took its toll on Venator's stock, Friedman said, as many mutual funds that target S&P stocks sold their shares in the company soon after the announcement was made.
"Clearly they have a management team that's been trying to turn around the business but it's taken longer than one would have hoped," he said.
Shares of Venator (Z) were up ½, or more than 7 percent, at 7-3/16 Wednesday morning on the New York Stock Exchange. That's down significantly from it's 52-week high of 27-1/4 last spring.
(Click here for a chart of Venator's stock activity)
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Venator
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