Men’s Warehouse Still Struggling To Find Its Way (NYSE:MW)

The Men’s Wearhouse retail chain has continued to struggle to find its footing after the ouster of its long time leader. The company’s stock has been plunging. Its shares have dropped more than 60 percent over the last three months. Men’s Wearhouse has also lowered earnings forecasts for the fiscal year. The company’s next earnings release is in early December.

George Zimmer is the founder of Men’s Wearhouse and was the public face of the company for many years. His abrupt ouster came after clashing with the board over the company’s direction. Zimmer got no severance or lucrative consulting agreement after his ouster.

Since leaving Men’s Wearhouse, Zimmer has started two digital businesses. One is zTailors, which matches tailors to customers, and the other is Generation Tux, a tuxedo rental business. In a recent interview, Zimmer said, “Getting fired was a blessing in disguise. I’m so happy not to be working in the retail store business.”

Men’s Wearhouse’s recently made the decision to acquire Joseph A. Bank for about $1.8 billion. The acquisition came roughly a year after Zimmer’s ouster. Men’s Wearhouse’s largest shareholder, Eminence Capital, had been pushing for a merger of the two chains. Months earlier, Joseph A. Bank had offered $2.3 billion for Men’s Wearhouse. Men’s Wearhouse today has a value below $1 billion, less than half of what Joseph A. Bank offered.

This month, Men’s Wearhouse announced that comparable sales dropped over 14 percent at Joseph A. Bank outlets. The drop was attributed to the cancellation of the company’s “Buy-One-Get-Three-Free” promotions in October. The excessive promotions tarnished the Joseph A. Bank brand more than anybody thought. The company is also facing rising competition from e-commerce businesses, which allow consumers to buy custom-tailored men’s suits, jackets and shirts online.

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