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The Men’s Wearhouse, Inc.

The Mens Wearhouse, Inc.

6094 Stewart Avenue
Fremont, California 94538
U.S.A.
Telephone: (877) 986-9669
Toll Free: (800) 776-SUIT (7848); (877) 986-9669
Fax: (877) 586-9669
Web site: http://www.menswearhouse.com

Public Company
Incorporated:
1974
Employees: 10,800
Sales: $1.27 billion (2001)
Stock Exchanges: New York
Ticker Symbol: MW
NAIC: 448110 Mens Clothing Stores; 448120 Womens Clothing Stores; 315222 Mens and Boys Cut and Sew Suit, Coat, and Overcoat Manufacturing; 315224 Mens and Boys Cut and Sew Trouser, Slack, and Jean Manufacturing

The Mens Wearhouse, Inc. is one of the most successful mens specialty store chains in the United States, dominating the mens tailored clothing field. It has accomplished this by offering men a comfortable environment in which to buy high quality suits, dress slacks, sport jackets, and sweaters at 20 to 30 percent below department store prices. To attract men, who notoriously dislike shopping, the stores were located in upscale strip shopping centers nearby customers homes and workplaces, eliminating the need to hike through large malls. A well-trained, friendly staff provided exceptional customer service, with tailors in every store and free pressing for the life of a garment. The combination of these factors plus aggressive radio and television advertising led to consistently increasing sales and earnings in a highly fragmented industry. With the acquisition of Moores Clothing, Mens Wearhouse became the owner of Canadas second largest manufacturing facility of mens suits and sport coats. In February 2002, the company operated 563 stores in the United States (497 under the Mens Wearhouse brand) and 113 Moores stores in Canada.

Early Years

In 1972, George Zimmer had been out of college for two years and was just back from a year in Hong Kong, where he had set up a factory for his fathers raincoat manufacturing business. He became a manufacturers representative for his fathers company, living in Dallas and driving throughout Texas, Louisiana, and Oklahoma to sell boys raincoats to stores.

When the buyer at Foleys in Houston, his biggest account, complained about racks of unsold raincoats, Zimmer talked his father into taking back $10,000 worth of merchandise. Despite this gesture, Foleys dropped the raincoat line, which angered Zimmer. In a 1993 Forbes article, he explained, As Tom Peters says, you have to be a monomaniac to build a business. The fuel for my monomania came from that situation with Foleys.

Taking $7,000, Zimmer rented a small store in a strip shopping center on the west side of Houston and stocked up with name-brand suits. He opened Mens Wearhouse in August 1973, selling the suits well below the prices charged at Foleys and other department stores. At the opening of the store, Zimmer was joined by his father and Harry Levy, a good friend from college.

It took his fathers firm more than six months to find a replacement for him, and from Monday through Thursday Zimmer continued to work as a traveling raincoat salesman. On Friday and Saturday he would be in Houston on the sales floor of Mens Wearhouse. In those days, blue laws kept stores closed on Sundays. Harry Levy, who eventually became senior vice-president of planning, covered the store during the week.

Once he was able to devote his full time to Mens Wear-house, Zimmer quickly opened two more stores and incorporated the company. He promoted his three stores with small advertisements in the Saturday sports section of local newspapers. In the first year, he had sales of $1 million and lost $20,000. At a friends suggestion, he switched to TV, filming inexpensive ads and buying unsold commercial space at a discount. Executive vice-president Richard Goldman, who joined the company in 1974 after selling Zimmer advertising space, told MR Magazine, Mary Hartman Mary Hartman becomes the #1 rated TV show in Houston at 10:30 p.m.; commercials cost $700 each, except for ours, which we bought before the series started at $18.25 per spot. By 1981, there were 12 Mens Wearhouses, and by the end of 1985 the chain had grown to 25.

During those early years, Zimmer, Levy, and Goldman established the conceptual basis of their business, which has not changed. Goldman explained to MR Magazine, Our strategy is to be like the old time mens clothing store around the corner, except that we add price as a key ingredient. We realize that men hate to shop, so we actually try to make it fun!

The company targeted the moderate-income professional and semi-professional male worker. It kept its stores relatively small, between 4,000 and 4,500 square feet, because, as Zimmer told the Daily News Record in 1996, Men dont really like taking their pants off in places larger than 5,000 square feet. The stores were clustered in mid-sized cities to take advantage of advertising and distribution savings and to make them convenient to get to. This was important because a customer had to go to the store twice (once to buy and get measured and again to pick up and try on the suit after alteration). The company expanded the merchandise mix, adding to its line of suits other tailored clothingsport coats, dress shirts, and dress slacksand offering accessories such as ties and belts.

The company emphasized integrity and service. Employees, trained in customer service skills, were also treated as family, with everyone on a first-name basis, and most were hired full time. Zimmer began donating a percentage of pre-tax profits to charities, establishing a reputation for the company as being socially responsible. Vendors were also treated well, and the company never canceled an order. One of Mens Wearhouses biggest customers told Jeffrey Arlen of Discount Store News, They do what they say they are going to do. They are very focused and honorable.

Some of the companys competitors disagreed. In the mid-1980s, Mens Wearhouse moved into California. Following its successful Texas formula, the company would open a store, advertise heavily with Zimmer doing his own television ads, and then open several more stores in the area. In 1989, Nordstrom Department Store sued Mens Wearhouse for false advertising, disputing the companys claim that Mens Wear-house suits were identical to those sold by Nordstrom. In 1990, C&R Clothiers also sued, complaining about false claims regarding pricing. Both lawsuits were settled when Mens Wear-house agreed to stop running the ads.

199094: Explosive Growth

The first half of the 1990s saw tremendous growth for the company. It opened 17 new stores in 1990 and 19 the following year. In April 1992, Zimmer took the company public, selling 2.25 million shares at $8.67 per share and raising $12.7 million. That year, new store openings jumped to 31, including the first Mens Wearhouse outlet center, in Houston. At over 7,000 square feet, this was much larger than the regular Mens Wear-house stores. The outlet had limited services and carried greater quantities of merchandise.

In the fall of 1992, the company introduced Made by America (MBA), a sportswear catalog. The catalog contained only quality, U.S.-made sportswear. In keeping with its ecologically and socially responsible culture, the company avoided mass mailings by distributing the catalogs through its retail stores. When that proved unsuccessful, the company mailed catalogs to customers who had previously bought clothing through the mail. Although cleverly written (and with a percentage of sales going to reduce the national deficit), the catalog did not generate sufficient sales and was discontinued in 1993.

In 1993, most discount stores suffered a decline in business, with the Discount Stores News Stock Index of 86 stocks falling 5.9 percent. Except for its MBA catalog, however, Mens Wear-house had a great year. The companys second public offering raised $10.4 million, with 1.3 million shares selling at $12 per share. This allowed Zimmer to pay off debts while opening 40 stores during the year, including two more outlet stores. The company ended the year with net sales of $240.4 million and earnings of $8.7 million. Between 1991 and 1993, Mens Wear-house doubled its net earnings on a net sales increase of 80 percent.

In May 1994, the company completed its third public offering of one million shares at $29 per share, which generated net proceeds of $14.5 million. This provided the financing to open more stores and to acquire the licenses for tailored clothing produced for French designer Pierre Balmain and Italian designer Vito Rufolo. The company began manufacturing as well as selling the new lines, using its direct-sourcing capabilities in the United States and overseas. In addition to its private labels, the company offered brand name suits by Pierre Cardin, Geoffrey Beene, Calvin Klein, and Oscar De la Renta.

Mens Wearhouse purchased the Coach House in Pittsburgh, which gave the company a major presence in western Pennsylvania. In June, Mens Wearhouse hired Michael Batlin from Macys West to expand its shoe business. The company had started selling shoes three years earlier, offering Rockport, Flor-sheim, and Bostonian; it began offering its own private-label brand in early 1994.

Company Perspectives:

The mission of Mens Wearhouse is to maximize sales, provide value to our customers and deliver top quality customer service while still having fun and maintaining our values. These values include nurturing creativity, growing together, admitting to mistakes, promoting a happy and healthy lifestyle, enhancing a sense of community and striving toward becoming self-actualized people.

The company also decided to offer Big and Tall sizes. To provide the space for these expansions, it increased the floor space of its new stores an additional 500 square feet to 5,000 square feet. Company growth was aimed at the Southeast, and by the middle of the year there were ten stores in Florida, five in North Carolina, 11 in Georgia, and about a dozen in neighboring states. At the end of 1994, there were 230 stores, more than double the number existing when the company went public in 1992. Net sales for the year increased 32 percent, to $317.1 million.

1995: A Big Year

The year 1995 saw the opening of a 35,500-square-foot office, training, and redistribution facility in California. Staff training had always been an important part of Mens Wear-houses strategy, and all employees went through a three-day Suits University program conducted at the companys executive headquarters. Richard Goldman explained the companys thinking in a 1995 interview with Discount Store News. We want our people to feel they are being treated fairly, and it all starts at Suits U. First of all its an all-expenses-paid trip to northern California, which can mean a lot to a new employee. Once we get them at Suits U. we dont teach people how to use the cash register; that they can learn in the store. What we do is inculcate them with the corporate culture. Sessions included selling techniques, product information, in-store training meetings, and social events. Employees were trained in helping customers select an entire wardrobe, not just a suit or a pair of slacks.

During the year the company executed a revolving loan agreement of $100 million to be used primarily to pay for the companys planned growth and, in July, filed a secondary offering of two million shares. In September, Mens Wearhouse acquired the North American rights for exclusive use of the Botany, Botany 500, and Botany Couture labels. These had been owned by the McGregor division of Samsonite Corporation, which sold the tuxedos, sport coats, and suits through its 500 Fashion Group. Botany 500 became a prominent label in the industry in the 1930s. When Botany went bankrupt in 1972, its labels were bought by Joseph H. Cohen (JHC) of Philadelphia. JHC became a division of Rapid-American, which, after numerous acquisitions and name changes, was the predecessor of Samsonite Corp.

Although the company had planned to expand its Big and Tall inventory into more stores, it found the line selling better than expected in the first 50 stores, which, paradoxically, limited its expansion. We werent able to roll it out to as many stores as we wanted to. We had to go back and fill in at the stores where it was selling well, Richard Goldman told Daily News Record in a January 1996 interview.

The year 1995 also saw the company move into new markets, including Cincinnati, Milwaukee, and Chicago, which was one of the top five markets for mens tailored clothing. The companys biggest competitor in Chicago, Todays Man, was facing financial difficulties, and within a year had closed all its stores in that market. In the meantime, sales in the new Mens Wearhouse stores were higher than expected.

Industry consolidation and weak sales were taking their toll on department and menswear specialty stores. Traditionally, most suits were sold in department stores or small mom-and-pop operations with one or two stores. In the first half of the 1990s, according to Kernkraut and Abramowitz at Bear Sterns, approximately 4,000, or 23 percent, of the mens clothing boutiques closed, and department stores cut back their mens suit departments. This industry trend was especially pronounced during 1995. Brooks Brothers, a subsidiary of Mark& Spencer, lost $4 million during the first half of the year; the 114-store Britches of Georgetown was put up for sale; Hartmarx sold its Kuppenheimer stores division; and several regional chains declared bankruptcy.

A major factor in the decreasing sales of tailored clothing was the move toward more casual business dress. Mens Wearhouse responded to this trend by slightly increasing its stores selection of sport coats and slacks, replacing about 60 suits with an equal number of sport coats. At the same time, the company increased the training employees received, stressing all aspects of a customers business attire needs.

In late 1995, the company produced a video entitled How to Dress Casually and Still Mean Business, in which a sales associate led the viewer on a guided tour of what is needed for a complete office wardrobe. The video was distributed to each Mens Wearhouse store. While managers could show it in the store (it was only seven minutes long), the company had a larger objective: staging free how-to fashion shows at local businesses. Managers mailed free copies of the video to human resource directors or other company contacts, with an accompanying letter offering to conduct a live fashion show for male employees, either on-site or at the store.

The company used a similar approach in a 1996 advertisement about business casual wear on Houston Chronicle Interactive, the Houston Chronicles web site. That piece discussed textures and colors of jackets and sport coats, with tips such as the belt should match your shoes, and business casual socks are printed socks you can wear with a suit.

George Zimmer received some free advertising on the Web courtesy of Steve Kubby, publisher of Alpine World, an on-line magazine. In a letter to readers, Kubby wrote, Several months ago we approached Mens Wearhouse about supporting a tree-free alternative to magazines printed on paper made from trees. I learned that under Georges leadership, Mens Wearhouse was actively involved in recycling, in using hemp paper, and in supporting environmental causes. So they agreed to advertise with usonly they didnt want an ad! Kubby also wrote that Zimmer actively participated, with money and time, in making the Oakland Zoo one that is endorsed by animal rights activists around the world.

Key Dates:

1973:
The first Mens Wearhouse store opens in Houston.
1991:
The company goes public.
1995:
A new office opens in California that also handles distribution and the training of employees.
1996:
The brands of Kuppenheimer and Joseph& Feiss are acquired.
1997:
Value Priced Clothing division formed from C&R Clothiers Inc. and NAL chains.
1998:
The company opens its first store in New York City.
1999:
Canadas Moores Retail Group and Atlantas K&G Mens Center are acquired.
2000:
The first K&G Womens Superstore opens.

During 1996, the company opened its first store in the Washington, D.C., market, marking its initial entry into the Northeast. It planned to open several more in the Washington-Baltimore area and to enter the Boston-Providence market before the end of the year. First quarter net earnings were 53 percent higher than in 1995, and comparable store sales rose 7.6 percent, compared to a 4.3 percent increase for the same period the previous year. As analysts at Robertson, Stephens& Company noted in their recommendation of April 30, 1996, The Mens Wearhouse has never depended on strong industry growth but solely on the companys superior fundamentals and growth prospects.

Ending the 1990s with a Shopping Spree

The last half of the 1990s was largely a tale of growth by acquisition, though the company did try out a couple of new concepts later in the decade. During this time, Mens Wear-house would become a billion dollar business, with even more ambitious targets ahead.

In March 1996, the company joined a liquidator (Buxbaum, Ginsberg& Associates) in buying the assets of Atlanta-based Kuppenheimer Mens Clothiers, which had 43 stores. The unique arrangement allowed Mens Wearhouse to control Kuppenheimers going out of business sales.

In December 1996, Mens Wearhouse acquired several mens clothing brands from Joseph& Feiss Co. Inc. (J&F), including Cricketeer, Country Britches, Joseph& Feiss, and Cox& Hawkins. J&F, a subsidiary of Hugo Boss AG, produced clothing at a Cincinnati plant that was not part of the deal. Mens Wearhouse ended 1996 with about 300 stores.

In 1997, Mens Wearhouse acquired 17 stores of southern Californias C&R Clothiers Inc. and the six super-sized stores, up to 19,000 square feet each, of Walter Pyes NAL in Houston. These formed the basis of the new Value Priced Clothing Inc. division, created in January of the year following the C&R purchase.

Mens Wearhouse underwent an extensive corporate makeover in 1997. New, more subdued advertising emphasized service and expertise, in contrast to the brash, price-centered pitches of earlier years. Sales rose 30.5 percent to $631.1 million in the 199798 fiscal year, and earnings were up 36.6 percent to $28.9 million. The company had 396 stores, including 25 in the Value Priced Clothing division.

Mens Wearhouse unsuccessfully tried to buy Todays Man, then based in Philadelphia and in bankruptcy. The company did enter the New York City market in 1998, setting up a massive 7,600-square-foot store on Madison Avenue. The company then turned its sights northward.

Mens Wearhouse acquired the 107-store Moores Retail Group in February 1999. Mens Wearhouse had begun courting Moores the Suit People, Canadas largest retailer of mens tailored clothing, in 1995. Moores CEO Martin Prosserman declined Mens Wearhouses $100 million purchase offer. Mens Wearhouse did end up buying the company three years later for about $125 million in stock and assumption of debt. Moores, which had 2,000 employees and sales of $121 million (C$183 million) in fiscal 199798, had been founded in 1961 as Golden Brand Clothing. It entered the retail business in 1980. Moores had its own 200,000-square-foot factory in Montreal, giving Mens Wearhouse a formidable private label capacity.

In March 1999, the company merged with K&G Mens Center Inc., a publicly traded, lower-end mens clothing chain open only on weekends. K&G, based in Atlanta, had 34 stores and 1998 sales of $139 million. This bolstered the Value Price Clothing division, which then operated 20 stores under the SuitMax name. These were renamed K&G after the merger. Mens Wearhouse soon added the four-unit, Detroit-area Suit Warehouse to its holdings.

By this time, Zimmer was projecting sales of $10 billion within fifteen years. First, the company had to deal with the relaxed, business casual dress code of the late-1990s. The percentage of tailored clothing offered at Mens Wearhouse stores was 65 percent and slipping as Mens Wearhouse gradually added more casual clothes. It also provided more space for big and tall offerings and set out to revamp and expand its stores to take on a range of competitors.

A couple of new concepts were rolled out. Mens Wear-house eyed the highly fragmented formal wear business, testing tuxedo rentals at a dozen Seattle stores in the spring of 1999. The formal wear market was younger than Mens Wearhouses traditional customer base. By February 2002, tuxedo rentals were being offered at 373 Mens Wearhouse stores.

In 1998, Mens Wearhouse was testing a K&G Ladies concept in the Atlanta area. It bought its first womens shop there in May 2000, under the name K&G Womens Superstore. It had plans to expand K&G Womens nationally beginning in 2002, eventually opening 165 stores nationwide. Zimmer believed the ladies side could equal the $1 billion in volume the mens side was then seeing.

In January 2000, Mens Wearhouse had 450 Mens Wear-house stores in the United States and another 51 stores of other types. Mens Wearhouse stock migrated from the NASDAQ Stock Exchange to the Big Board in the fall of 2000. Zimmer persuaded the New York Stock Exchange to simultaneously announce a new dress policy.

Mens Wearhouse was reported to be bidding for Brooks Bros., marketer of upscale mens clothing, in the summer of 2001; instead, Retail Brand Alliance bought it from U.K. retailer Marks& Spencer. Mens Wearhouses net sales slipped 4.5 percent to $1.27 billion in the fiscal year ending February 2,2002. Net earnings of $43.3 million were half those of the previous year. Nevertheless, using past performance as a predictor, the future of Mens Wearhouse continued to hold promise.

Principal Subsidiaries

Golden Moores Finance Company (Canada); K&G Mens Center, Inc.; The Mens Wearhouse of Michigan, Inc.; Renwick Technologies, Inc.; TMW Capital Inc.; TMW Marketing Company, Inc.; TMW Realty Inc.; Twin Hill Acquisition Company, Inc.

Principal Divisions

Mens Wearhouse; Moores Clothing for Men; K&G.

Principal Competitors

Brooks Brothers; Federated Department Stores, Inc.; Jos. A. Bank Clothiers, Inc.; Todays Man, Inc.

Further Reading

Arlen, Jeffrey, The Mens Wearhouse: Tailoring an Off-Price Mix, Discount Store News, February 20, 1995, p. A16.

Duff, Mike, Mens Wearhouse Adds Additional Layers with Expanded Casual Line, New Formalwear, Discount Store News, April 3, 2000, p. 3.

Evenson, Laura, Nordstrom, Mens Wearhouse Settle, San Francisco Chronicle, May 12, 1989, p. C2.

Gellers, Stan, and Jean Palmieri, Mens Wearhouse Acquires License for Three Botany Clothing Labels, Daily News Record, September 21, 1995, p. 1.

Gellers, Stan, Jean Palmieri, and Thomas Ryan, Bidding War Brewing for C&R Clothiers, Daily News Record, November 19, 1996, p. 4.

Goldfield, Robert, The Mens Wearhouse Trying On Womens Apparel Market for Size, Houston Business Journal, June 30, 2000, p. 8A.

Houston Chronicle Interactive, The Mens WearhouseHow to Dress: Business Casual, Houston Chronicle Marketplace, http://www.chron.com, July 1996.

Karr, Arnold, Jockeying for Position, MR Magazine, June 1995, p. 56.

Kloppenburg, Janet, and Carolyn Capaccio, The Mens Wearhouse, Inc., San Francisco: Robertson, Stephens& Company, 1996.

Kubby, Steve, The Mens Wearhouse: An Unsolicited Testimonial by the Publisher, Alpine World Publishing, July 1996.

Mui, Nelson, No Longer Full of Sound and Fury, George Zimmer Now Has a Soft Touch, Daily News Record, March 12, 1999, p. 10.

OReilly, Charles III, and Jeffrey Pfeffer, The Mens Wearhouse: Growth in a Declining Market, Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People, Boston: Harvard Business School Press, 2000, pp. 7998.

Palmieri, Jean, and Stan Gellers, J&F Labels Acquired by Mens Wearhouse; Brands Include Cricketeer, Country Britches, Daily News Record, December 17, 1996, p. 1.

Palmieri, Jean, James Fallon, and Samantha Conti, Mens Wearhouse May Be in Bid for Brooks Bros., WWD, July 2, 2001, p. 2.

Poole, Claire, Dont Get Mad, Get Rich, Forbes, May 24, 1993, p. 58.

Veverka, Mark, Analysts Say Mens Wearhouse Is All Dressed Up and Ready to Go, Wall Street Journal, December 10, 1997.

Zimmer, George, and Ilan Mochari, My Biggest Mistake, Inc., June 2000, p. 123.

Ellen D. Wernick
update: Frederick C. Ingram

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The Men’s Wearhouse, Inc.

The Mens Wearhouse, Inc.

40590 Encyclopedia Circle
Fremont, California 94538
U.S.A.
(510) 657-9821
Fax: (510) 657-0872

Public Company
Founded: 1973
Employees: 4,100
Sales: $406.3 million (1995)
Stock Exchanges: NASDAQ

SICs: 5611 Mens and Boys Clothing Stores

The Mens Wearhouse, Inc. is one of the most successful mens specialty store chains in the United States, dominating the mens tailored clothing field. It has accomplished this by offering men a comfortable environment in which to buy high quality suits, dress slacks, sport jackets, and sweaters at 20 to 30 percent below department store prices. In June 1996, the company operated 299 stores in 29 states, and was opening about 50 new stores a year. To attract men, who notoriously dislike shopping, the stores were located in upscale strip shopping centers that were convenient to customers homes and workplaces and eliminated the need to hike through large malls. A well-trained, friendly staff provided exceptional customer service, with tailors in every store and free pressing for the life of a garment. The combination of these factors plus aggressive radio and television advertising led to consistently increasing sales and earnings in a highly fragmented industry. Net sales for 1995 totaled $406.3 million, an increase of 28.1 percent over the previous year. Net earnings increased 36.3 percent in the same period. CEO George Zimmer and his family own 42 percent of the stock.

Early Years

In 1972 George Zimmer had been out of college for two years and was just back from a year in Hong Kong, where he had set up a factory for his fathers raincoat manufacturing business. He became a manufacturers representative for his fathers company, living in Dallas and driving throughout Texas, Louisiana, and Oklahoma to sell boys raincoats to stores.

When the buyer at Foleys in Houston, his biggest account, complained about racks of unsold raincoats, Zimmer talked his father into taking back $10,000 worth of merchandise. When Foleys dropped the raincoat line anyway, Zimmer got angry. In a 1993 Forbes article he explained, As Tom Peters says, you have to be a monomaniac to build a business. The fuel for my monomania came from that situation with Foleys.

Taking $7,000, Zimmer rented a small store in a strip shopping center on the west side of Houston and stocked up with name-brand suits. He opened The Mens Wearhouse in August 1973, selling the suits well below the prices charged at Foleys and other department stores. With him at the opening were his father and Harry Levy, a good friend from college.

It took his fathers firm more than six months to find a replacement for him. So from Monday through Thursday Zimmer was on the road, selling raincoats. On Friday and Saturday he would be in Houston, on the sales floor of The Mens Wearhouse. In those days, blue laws kept stores closed on Sundays. Harry Levy, who eventually became senior vice-president of planning, covered the store during the week.

Once he was able to devote his full time to The Mens Wearhouse, Zimmer quickly opened two more stores and incorporated the company. He promoted his three stores with small advertisements in the Saturday sports section of local newspapers. In the first year he had sales of $1 million and lost $20,000. At a friends suggestion, he switched to TV, filming inexpensive ads and buying unsold commercial space at a discount. Executive Vice-Presidentr Richard Goldman, who joined the company in 1974 after selling Zimmer advertising space, told MR Magazine, Mary Hartman Mary Hartman becomes the # 1 rated TV show in Houston at 10:30 p.m.; commercials cost $700 each, except for ours, which we bought before the series started at $18.25 per spot. By 1981 there were 12 Mens Wearhouses, and by the end of 1985, the chain had grown to 25.

During those early years, Zimmer, Levy, and Goldman established the conceptual basis of their business, which has not changed. Goldman explained to MR Magazine, Our strategy is to be like the old time mens clothing store around the corner, except that we add price as a key ingredient. We realize that men hate to shop, so we actually try to make it fun!

The company targeted the moderate-income professional and semi-professional male worker. It kept its stores relatively small, between 4,000 and 4,500 square feet, because, as Zimmer told the Daily News Record in 1996, Men dont really like taking their pants off in places larger than 5,000 square feet. The stores were clustered in a mid-sized city to take advantage of advertising and distribution savings and to make them convenient to get to. This was important because a customer had to go to the store twice (once to buy and get measured and again to pick up and try on the suit after alteration). The company expanded the merchandise mix, adding other tailored clothingsport coats, dress shirts, and dress slacksto its suits and offered accessories such as ties and belts.

The company emphasized integrity and service. Employees, trained in customer service skills, were also treated as family, with everyone on a first-name basis, and most were hired full time. Zimmer began donating a percentage of pre-tax profits to charities, establishing a reputation for the company as being socially responsible. Vendors were also treated well, and the company never canceled an order. One of The Mens Wear-houses biggest customers told Jeffrey Arlen of Discount Store News, They do what they say they are going to do. They are very focused and honorable.

Some of the companys competitors disagreed. In the mid-1980s The Mens Wearhouse moved into California. Following its successful Texas formula, the company would open a store, advertise heavily with Zimmer doing his own television ads, and then open several more stores in the area. In 1989 Nordstrom Department Store sued The Mens Wearhouse for false advertising, disputing the companys claim that Mens Wearhouse suits were identical to those sold by Nordstrom. In 1990 C&R Clothiers also sued, complaining about false claims regarding pricing. Both suits were settled when The Mens Wearhouse agreed to stop running the ads.

1990-94: Explosive Growth

The first half of the 1990s saw tremendous growth for the company. It opened 17 new stores in 1990 and 19 the following year. In April 1992 Zimmer took the company public, selling 2.25 million shares at $8.67 per share and raising $12.7 million. That year new store openings jumped to 31, including the first Mens Wearhouse outlet center, in Houston. At over 7,000 square feet, this was much larger than the regular Mens Wear-house stores. The outlet had limited services and carried greater quantities of merchandise.

In the fall of 1992, the company introduced Made by America (MBA), a sportswear catalog. The catalog contained only quality, U.S.-made sportswear. In keeping with its ecologically and socially responsible culture, the company avoided mass mailings by distributing the catalogs through its retail stores. When that proved unsuccessful, the company mailed catalogs to customers who had previously bought clothing through the mail. Although cleverly written (and with a percentage of sales going to reduce the national deficit), the catalog did not generate sufficient sales and was discontinued in 1993.

1993 was a rough year for most discount stores, with the Discount Stores News Stock Index of 86 stocks falling 5.9 percent. Except for its MBA catalog, however, The Mens Wearhouse had a great year. The companys second public offering raised $10.4 million, with 1.3 million shares selling at $12 per share. This allowed Zimmer to pay off debts while opening 40 stores during the year, including two more outlet stores. The company ended the year with net sales of $240.4 million and earnings of $8.7 million. Between 1991 and 1993, The Mens Wearhouse doubled its net earnings on a net sales increase of 80 percent.

In May 1994 the company completed its third public offering of one million shares at $29 per share, which generated net proceeds of $14.5 million. This provided the financing to open more stores and to acquire the licenses for tailored clothing produced for French designer Pierre Balmain and Italian designer Vito Rufolo. The company began manufacturing as well as selling the new lines, using its direct-sourcing capabilities in the United States and overseas. In addition to its private labels, the company offered brand name suits including Pierre Cardin, Geoffry Beane, Calvin Klein, and Oscar De la Renta.

The company purchased the Coach House in Pittsburgh, which gave the company a major presence in western Pennsylvania. In June The Mens Wearhouse hired Michael Batlin from Macys West to expand its shoe business. The company had started selling shoes three years earlier, offering Rockport, Flor-sheim, and Bostonian; it began offering its own private-label brand in early 1994.

Company Perspectives:

The mission of The Mens Wearhouse is to maximize sales, provide value to its customers and deliver top quality customer service, while still having fun and maintaining the companys values. The Companys commitment to operate a growing, profitable and socially responsible compay is a commitment of which its shareholders can be proud. The Company seeks to adhere to its culture, not only as a means for achieving economic success, but because adherence is a worthwhile goal in and of itself

The company also decided to offer Big and Tall sizes. To provide the space for these expansions, it increased the floor space of its new stores an additional 500 square feet to 5,000 square feet. Company growth was aimed at the Southeast, and by the middle of the year, there were ten stores in Florida, five in North Carolina, 11 in Georgia, and about a dozen in neighboring states. At the end of 1994, there were 230 stores, more than double the number existing when the company went public in 1992. Net sales for the year increased 32 percent, to $317.1 million.

1995 and Beyond

1995 saw the opening of a 35,500 square foot office, training, and redistribution facility in California. Staff training had always been an important part of The Mens Wearhouse strategy, and all employees went through a three-day Suits University program, conducted at the companys executive headquarters. Richard Goldman explained the companys thinking in a 1995 interview with Discount Store News.We want our people to feel they are being treated fairly, and it all starts at Suits U. First of all its an all-expenses-paid trip to Northern California, which can mean a lot to a new employee. Once we get them at Suits U. we dont teach people how to use the cash register; that they can learn in the store. What we do is inculcate them with the corporate culture. Sessions included selling techniques, product information, in-store training meetings, and social events. Employees were trained in helping customers select an entire wardrobe, not just a suit or a pair of slacks.

During the year the company executed a revolving loan agreement of $100 million to be used primarily to pay for the companys planned growth and, in July, filed a secondary offering of two million shares. In September The Mens Wear-house acquired the North American rights for exclusive use of the Botany, Botany 500, and Botany Couture labels. These had been owned by the McGregor division of Samsonite Corporation, which sold the tuxedos, sport coats, and suits through its 500 Fashion Group. Botany 500 became a prominent label in the industry in the 1930s. When Botany went bankrupt in 1972, its labels were bought by Joseph H. Cohen (JHC) of Philadelphia. JHC became a division of Rapid-American, which, after numerous acquisitions and name changes, was the predecessor of Samsonite Corp.

Although the company had planned to expand its Big and Tall inventory into more stores, it found the line selling better than expected in the first 50 stores, which, paradoxically, limited its expansion.We werent able to roll it out to as many stores as we wanted to. We had to go back and fill in at the stores where it was selling well, Richard Goldman told Daily News Record in a January 1996 interview.

1995 also saw the company move into new markets, including Cincinnati, Milwaukee, and Chicago, which was one of the top five markets for mens tailored clothing. The companys biggest competitor in Chicago, Todays Man, was facing financial difficulties, and within a year had closed all its stores in that market. In the meantime, sales in the new Mens Wearhouse stores were higher than expected.

Industry consolidation and weak sales were taking their toll on department and menswear specialty stores. Traditionally, most suits were sold in department stores or small mom-and-pop operations with one or two stores. In the first half of the 1990s, according to Kernkraut and Abramowitz at Bear Sterns, approximately 4,000, or 23 percent, of the mens clothing boutiques closed, and department stores cut back their mens suit departments. 1995 was a particularly bad year for the industry. Brooks Brothers, a subsidiary of Mark & Spencer, lost $4 million during the first half of the year; the 114-store Britches of Georgetown was put up for sale; Hartmarx sold its Kuppenheimer stores division; and several regional chains declared bankruptcy.

A major factor in the decreasing sales of tailored clothing was the move toward more casual business dress. The Mens Wearhouse responded to this trend by slightly increasing its stores selection of sport coats and slacks, replacing about 60 suits with an equal number of sport coats. At the same time, the company increased the training employees received, stressing all aspects of a customers business attire needs.

In late 1995 the company produced a video entitled * How to Dress Casually and Still Mean Business, in which a sales associate led the viewer on a guided tour of what is needed for a complete office wardrobe. The video was distributed to each Mens Wearhouse store. While managers could show it in the store (it was only seven minutes long), the company had a larger objective: staging freehow-to fashion shows at local businesses. Managers mailed free copies of the video to human resource directors or other company contacts, with an accompanying letter offering to conduct a live fashion show for male employees, either on-site or at the store.

The company used a similar approach in an 1996 advertisement about business casual wear on Houston Chronicle Interactive, the Houston Chronicles web site. That piece discussed textures and colors of jackets and sport coats> with tips such asthe belt should match your shoes, andbusiness casual socks are printed socks you can wear with a suit.

George Zimmer received some free advertising on the World Wide Web courtesy of Steve Kubby, publisher of Alpine World, an on-line magazine. In a letter to readers, Kubby wrote, Several months ago we approached The Mens Wearhouse about supporting a tree-free alternative to magazines printed on paper made from trees.... I learned that under Georges leadership, The Mens Wearhouse was actively involved in recycling, in using hemp paper, and in supporting environmental causes. So they agreed to advertise with usonly they didnt want an ad! Kubby also wrote that Zimmer actively participated, with money and time, in making the Oakland zooone that is endorsed by animal rights activists around the world.

During 1996 the company opened its first store in the Washington, D.C., market, marking its initial entry into the North-east. It planned to open several more in the Washington-Baltimore area and to enter the Boston-Providence market before the end of the year. First quarter net earnings were 53 percent higher than in 1995, and comparable store sales rose 7.6 percent, compared to a 4.3 percent increase for the same period the previous year. As analysts at Robertson, Stephens & Company noted in their recommendation of April 30, 1996, The Mens Wearhouse has never depended on strong industry growth but solely on the companys superior fundamentals and growth prospects.

Further Reading

Arlen, Jeffrey, The Mens Wearhouse: Tailoring an Off-Price Mix, Discount Store News, February 20, 1995, p. A16.

Evenson, Laura, Nordstrom, Mens Wearhouse Settle, San Francisco Chronicle, May 12, 1989, p. C2.

Gellers, Stan, and Jean Palmieri, Mens Wearhouse Acquires License for Three Botany Clothing Labels, Daily News Record, September 21, 1995, p. 1.

Giroux, Stephanie, The Mens Wearhouse, Paine Webber, November 15, 1995.

Grossman, Karen Alberg, Something More, MR Magazine, p. 12.

Houston Chronicle Interactive, The Mens WearhouseHow to Dress: Business Casual, Houston Chronicle Marketplace, http://www.chron.com, July 1996. Karr, Arnold, Jockeying for Position, MR Magazine, June 1995,

p. 56. Kernkraut, Steven, and Pamela Abramowitz, Recommendation and Follow-UpMens Wearhouse, Inc., New York: Bear, Stearns & Co. Inc., November 13, 1995.

Kloppenburg, Janet, and Carolyn Capaccio, The Mens Wearhouse, Inc., San Francisco: Robertson, Stephens & Company, April 30, 1996.

Kubby, Steve, The Mens Wearhouse: An Unsolicited Testimonial by the Publisher, Alpine World Publishing, http://www.alpworld.com, July 1996.

Mammarella, James, Dim the House Lights and Educate the Client,Daily News Record, January 15, 1996, p. 60.

McAllister, Robert, Mens Wearhouse Putting Shoes on Expansion Track, Footwear News, July 25, 1994, p. 6.

Mens Wearhouse Launches MBA Catalog, Catalog Age, January 1993, p. 44.

Mens Wearhouse Net Jumps 38% in 4th Quarter, Daily News Record, March 7, 1996, p. 2.

Mens Wearhouse Obtains $100 Credit Agreement, Daily News Record, March 15, 1995, p. 10.

Mens Wearhouse Files Secondary Stock Offering, Daily News Record, July 28, 1995, p. 10.

Motamedi, Beatrice, Mens Wearhouse Agrees to Pull Ads, San Francisco Chronicle, July 19, 1990, p. Cl.

Narum, Beverly, Clothing Chain Opening First Outlet Center, Houston Post, September 3, 1992, p. B4.

Nordby, Neil, 93 Discount Stocks on Sale Rack, Discount Store News, January 17, 1994, p. 1.

Palmeri, Christopher, MBA as d-u-d, Forbes, January 17, 1994, p. 20.

Palmieri, Jean, The Man Who Would Be King of Clothing, Daily News Record, January 22, 1996, p. 16.

, Good Causes Are Always in Stock at Mens Wearhouse, Daily News Record, June 13, 1994, p. 8.

, Jean, Mens Wearhouse to Build up Its Big & Tall Biz, Daily News Record, October 4, 1994, p. 2. Poole, Claire, Dont Get Mad, Get Rich, Forbes, May 24, 1993,

p. 58. Power, Gavin, Building a Retail Empire, San Francisco Chronicle, November 26, 1993.

Ruth, Alice A., Elizabeth Beach Mills, and Sharon A. Singer, The Mens Wearhouse, Inc., San Francisco: Montgomery Securities, June 1, 1995.

Tuller, David, Mens Wearhouse Ads False, Nordstrom Says, San Francisco Chronicle, March 25, 1989, p. Bl.

Ellen D. Wernick

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