Men’s Wearhouse’s acquisition of rival Jos. A Bank hasn’t worked out as expected, with a series of missteps by the clothier contributing to a dramatic decline in sales at Jos A. Bank stores, according to Fortune.
After acquiring Jos. A Bank for $1.8 billion early last year, creating the fourth-largest men’s apparel chain in the U.S., Men’s Wearhouse said the deal would lead to cost synergies and new customers.
But earlier this week, the company reported that sales at Jos. A Bank locations open at least a year tumbled 14.6% in the third quarter as fewer customers visited those shops. It was the second quarter in a row to show a decline and, for the quarter to date, which includes part of the critical holiday shopping season, Jos. A. Bank same-store sales were down 35.1%.
Men’s Wearhouse shares were down 20% in trading Thursday, giving the company a stock market value of $710 million, barely more than a third of what it paid for Jos. A Bank.
Among other missteps, Fortune said the retailer had erred in eliminating Jos. A Bank’s “legendary ‘buy one suit, get three free’ deals” in an effort to “bring the brand closer to the overall company’s more modest promotional strategy and wean shoppers off what CEO Doug Ewert called ‘unsustainable’ discounts.’”
“Shoppers have stayed away in droves,” Fortune said.
In a conference call with analysts Thursday, Ewert said he was considering every way to cut costs, including closing stores and slashing jobs. He has also hired turnaround experts Alix Partners.
But one thing he said he won’t do is cut his losses by dumping the Jos. A Bank brand.
“We’re not anywhere near that,” Ewert said. “This is a core brand for us. It attracts a different customer than we see in any of our brands. This company is in our sweet spot from a strategic standpoint, and we’re going to turn this around.”
The decline in sales at Jos. A Bank has prompted Men’s Wearhouse to take a $90.1 million writedown on its investment.