Men's Wearhouse Fires Founder Zimmer, Shares Fall (Update 1)

Tickers in this article: JOSB MW

This story has been updated with additional information.

NEW YORK ( TheStreet) - The Men's Wearhouse was sinking after the men's apparel retailer said its executive chairman, founder and brand spokesman George Zimmer had been "terminated."

The company's board of directors "expects to discuss with Mr. Zimmer the extent, if any, and terms of his ongoing relationship with the company," it said in a press release.

Men's Wearhouse was falling 2% to $36.73 on volume of roughly 2 million shares, nearly four times the stock's three-month average daily trading volume. Men's Wearhouse competitor, Jos A Bank Clothiers shares were up 0.1% to $39.56.

Men's Wearhouse also postponed its annual meeting of shareholders, which was originally scheduled to start Wednesday at 2pm ET.

"The purpose of the postponement is to re-nominate the existing slate of directors without Mr. Zimmer," it said. It plans to announce a rescheduled meeting date shortly.

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Known for his famous tagline on television commercials: "You're going to like the way you look. I guarantee it," Zimmer, 64, founded the company with his college roommates in 1973 and opened the first store in Houston.

As of April 2013, Zimmer owned 3.52% of the company's outstanding shares, the largest insider stake held, according to Bloomberg data.

The Fremont, Calif.-based company, which carries men's suits, sport coats, accessories as well as tuxedos under its flagship brand currently has 1,143 stores under its flagship brand, as well as its Canadian retailer Moores Clothing for Men and its discount retailer, K&G Superstores, which also offers women's apparel, as well as its U.K. brands.

Though the brief press release did not cite reasons for Zimmer's termination, Zimmer himself did shed a little light on the issue to CNBC.

"Over the past several months I have expressed my concerns to the Board about the direction the company is currently heading. Instead of fostering the kind of dialogue in the Boardroom that has in part contributed to our success, the Board has inappropriately chosen to silence my concerns through termination as an executive officer," Zimmer said to CNBC.

Stifel Nicolaus analyst Richard Jaffe reiterated his "buy" rating on shares in a note to clients Wednesday, saying the departure will not impact the company given its legal rights to Zimmer's image and hundreds of hours of footage of him.

"We believe current management has been running the business effectively and will continue to do so. While we believe near term uncertainty exists as MW responds to a difficult macro-economic environment, we remain positive on the long term viability of the company, and at the current stock price, the risk/reward is attractive," Jaffe wrote.

That said, "the use of Zimmer as spokesperson has, coincidentally been under review as management has been evaluating his effectiveness, particularly with the millennial consumer," Jaffe writes.