Jos. A. Banks' struggles puts pressure on Men’s Wearhouse

A decline in traffic at Jos. A. Banks stores weighed heavily on Men's Wearhouse in the third quarter, forcing the company to consider store closures and job cuts.



For the period ended Oct. 31, Men's Wearhouse posted a net loss of $27.2 million, or 56 cents per share. That’s down from earnings of $6.8 million, or 14 cents per share, in the same quarter a year ago. Net sales declined 2.8%, or $25.2 million, to $865.4 million. Overall same store sales increased 5.3% at Men's Wearhouse but decreased 14.6% at Jos. A. Bank, far below the company’s expectations, primarily driven by a decline in traffic.



"When we acquired Joseph Bank, we knew that we needed to correct the promotional model. However, we underestimated the impact to the near-term performance as we began to execute the difficult, but necessary, corrective steps,” said Doug Ewert, Men's Wearhouse CEO. “With the topline resetting to a lower level for the near-term, we are looking at every opportunity for cost reduction including store rationalization, labor, advertising and all relevant shared service costs and we are partnering with Alix Partners on specific elements of this work. We are challenging all assumptions and are fully focused on accelerating the Jos. A. Bank recovery."



The company also says it is focused on taking steps to grow revenue opportunities at Jos. A. Bank by re-engaging with current and lapsed customers while attracting new ones. It has introduced a new loyalty program. The company is also recalibrating its marketing strategy and has introduced a new incentive program that aligns with the new selling techniques.



Men's Wearhouse also announced it is writing down the value of the Jos. A. Bank trade name by $90.1 million. The move comes less than 18 months after Men's Wearhouse paid $1.8 billion to acquire Jos. A. Bank after a bidding war in which the companies tried to buy each other.



Also this week, the company announced it has appointed Irene Chang Britt as a member to the board of directors.



"Irene is a highly seasoned consumer products executive and director whose experience includes leadership roles at the Campbell Soup Company, Kraft Foods and Kimberly-Clark, as well as director roles at Dunkin Brands Group Inc. and Sunoco, Inc. I'm delighted to have Irene join our team and bring her wealth of experience to our board," said Ewert.



The Men's Wearhouse has 1,748 stores including tuxedo shops within Macy's stores.