Friday, March 11, 2016

Suit Stores to Close

It’s hard to make a living selling men’s suits these days. Tailored Brands is losing money and has decided to close 250 stores:

  • 14 percent of Jos. A Bank locations
  • 67 percent of MW Tux stores
  • all Jos. A Bank outlet stores
  • all Men’s Wearhouse outlet stores

Tailored Brands recently shut down Jos. A Bank’s separate quality-control operation. Both Men’s Wearhouse and Jos. A Bank have long been plagued by quality problems, so a shakeup in that department was overdue. The combined cost savings from these cuts, however, are not nearly enough by themselves to keep the company going. The cutbacks are intended to produce an annual savings equal to just one tenth of the size of the company’s latest quarterly loss.

Tailored Brands spent $1.8 billion for Jos. A Bank a year ago. The plan was to boost profit margins by eliminating the chain’s well-known promotions. That strategy bombed, with sales declining by 31 percent while profit evaporated across the combined company. Investors now see that acquisition as a colossal mistake. According to the stock market, the combined company is now worth $861 million, less than half of the price paid to acquire Jos. A Bank. Tailored Brands optimistically expects the Jos. A Bank store closings to lead to an increase in sales at the Men’s Wearhouse stores, allowing a return to profitability later this year. Realistically, that won’t happen — the no-style offerings at Men’s Wearhouse would repel Jos. A Bank shoppers — and both chains will probably continue to operate at a loss for years to come. The continuing troubles in the suit business show that it is not just teen apparel that is having trouble connecting with shoppers. Tailored Brands is positioned at the far end of the apparel spectrum but seems to face many of the same difficulties.