Jos. A. Bank Clothiers, Inc.

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Jos. A. Bank Clothiers, Inc.

500 Hanover Pike
Hampstead, Maryland 21074
Telephone: (410) 239-2700
Toll Free: (800) 285-2265
Fax: (410) 239-5700
Web site:

Public Company
Employees: 1,150
Sales: $187.16 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: JOSB
NAIC: 44811 Mens Clothing Stores

Jos. A. Bank Clothiers, Inc., is a retailer of mens formal and casual wear with over 100 stores, mostly located in the Eastern and Midwestern United States. The company also sells through catalogs and via the Internet. Bank only sells the companys own branded lines of clothing, which are priced 20 to 30 percent lower than goods of comparable quality offered by competitors like Brooks Brothers and Polo. Since coming close to bankruptcy in the late 1980s following a leveraged buyout (LBO), Banks has been fine-tuning its marketing and expanding its retail locations with successful results.


Jos. A. Bank traces its origins to the end of the nineteenth century, when Lithuanian immigrant Charles Bank opened a small tailor shop in Baltimore, Maryland. In 1898 his grandson Joseph A. Bank joined the firm, which had evolved into a trouser manufacturing company. Joseph, who had started working at the age of 11 as a cloth cutter, had become a salesman over the next decade, and in 1912 he married Anna Hartz, a saleswoman for a rival company. He then joined forces with his new mother-in-law to form L. Hartz and Bank, which manufactured and suits in the Baltimore area and sold them at wholesale.

The company continued in this form over the next several decades, in 1940 purchasing a building in Baltimore to house its offices, showroom, cutting, and shipping departments. In 1945 Joseph Bank and his son Howard bought out the Hartz family interest, renaming the company Joseph A. Bank Clothiers. At this time the Banks decided to focus on making clothing for businessmen, in an understated, conservative style, as there was a shortage of mens formal wear following World War II.

Banks move into retailing took place when Howard Bank began selling the companys suits out of the factory, initially hanging them for display on a pipe rack, as legend has it. Interest in retail sales was sparked, and the company reached an agreement with a store named Louies in Washington, D.C., to market the companys goods. Out-of-town customers had also begun writing to request cloth swatches and to order clothes, and in 1960 a catalog was introduced to allow sales over a wider geographical area. The company continued to manufacture mens clothing for the wholesale market as well.

Beginning in the late 1960s more retail outlets were opened, with the location of catalog customers often giving the company an idea about where to open a new store. Banks line of clothing continued to feature mens suits, which were well-manufactured and conservative in design. In 1977 the company branched out into womens professional clothing, introducing a line of skirts and suits.

Sale to Quaker Oats

In 1981 the Bank family, enticed by an offer of some $20 million, sold Jos. A. Bank to the Quaker Oats Company. At this time the company had 11 stores and several manufacturing facilities. Leonard Ginsberg, who had been with the company for a number of years, was retained as president. Under Quaker, Bank embarked on a campaign of expansion, opening 20 more locations within the next five years. Annual sales reached a peak of $112 million by 1986. Quaker, however, decided to get out of retailing and concentrate on its core strengths of food products and toys, and sold Jos. A. Bank and two other chains it owned in December of that year. Bank was purchased for $105 million in a leveraged buyout by a group that included McKinley Holdings, Eli S. Jacobs, and Bank management. Much of the financing came from Drexel Burnham Lambert.

Over the next several years Bank began to experience difficulties from both the debt generated by the LBO and soft sales from a weakening retail environment. In addition, the workplace was changing. The less formal style of the baby boom generation, which was moving into management, and the growing numbers of workers in computer industry, with its casual ethos, led increasing numbers of companies to relax their dress codes.

In 1988 CEO Leonard Ginsberg retired and was succeeded by David Waters, a veteran of Brooks Brothers and other major retailers. The company was still performing poorly, and losses continued to mount. In May 1989 Bank was restructured, and the companys lenders were given new bond notes and stock shares in exchange for accepting a delayed payment plan. McKinley Holdings, Jacobs, and Bank company management all essentially wrote off their investments, with one insider telling Warfields that the purchase price had been $20 million too high. Bank reported a loss of $48 million for the year.

1990: Bank Nears Bankruptcy

In early 1990 the companys board proposed to the bondholders that they exchange their bonds for equity in Jos. A. Bank. The offer was rejected, and shortly afterward a number of senior managers left the company, including CEO Waters. Bank was now on the verge of bankruptcy, and the board sought out a crisis management company, The Finley Group, for help. Timothy Finley, founder and president of that company, agreed to take the reins of Bank and try to get it back on its feet.

Timothy Finley, age 47, had been an accountant for Cannon Mills and Deloitte, Haskins & Sells before founding his crisis management firm in 1985. One of his team of eight associates would take charge of failing companies, and, in a period typically ranging from 6 to 18 months, either nurse them back to health or liquidate their assets. Finley was known for his quick decision making, which he sometimes characterized with the motto, Ready, Fire, Aim. After examining Banks situation, he came to the conclusion that its problems were not merely caused by the debt load of some $70 million, but by a loss of overall purpose and some bad marketing decisions. Though the company had always stood for quality at a fair price, it had recently been upgrading its stores into elegant, plush showrooms that gave customers the impression that the clothing cost more than it actually did. There were also production problems within Banks factories, as well as other issues.

After taking charge, Finley quickly let 250 employees go, and also tried once more to renegotiate with the companys lenders. In 1991 an agreement was reached in which they took an equity stake in Bank in exchange for their bonds. As part of this arrangement, Finley agreed to stay on for three years, something he had never done before. To address the companys image and marketing problems, he hired Henry Chick Schwartz to serve as president and oversee merchandising. Schwartz, who had many years of clothing industry experience, set about lowering prices and adding more contemporary flair to the suits. The company also began to run national advertisements to build brand awareness outside of its Baltimore stronghold. Plans were soon being made to open additional stores in Florida, and move or upgrade others in Philadelphia, St. Louis, and Louisville, Kentucky.

In the summer of 1991, Bank moved its corporate headquarters from Owings Mills, Maryland, to its distribution warehouse in Hampstead, and instituted a new computer system for stores that enabled improved gathering of data on customer preferences. In the fall, the company introduced its own credit card, with General Electric Credit handling the operation of this service. Bank stores, which had featured other brand names along with Bank-made products, began to drop all but the companys own lines from the shelves.

In 1992 Bank opened a prototype store in Oak Brook, Illinois, which featured a modified Shaker look, as opposed to the fancier, upscale style that had been introduced in the late 1980s. The chain soon had the new design in five other stores of the 43 it owned, with more to follow. The cost of the simplified interior was half that of the more luxurious style it was replacing. For 1992 Bank reported sales of nearly $150 million and profits of close to $3 million, its first time in the black since 1989. In 1993 the company began to expand more aggressively, opening 11 more stores over the year in widespread locations including Kansas, Connecticut, and Texas.

Initial Public Offering Follows Return to Profitability

With its financial situation now stabilized and a renewed emphasis on growth, the companys management went to Wall Street to secure more capital for expansion. In May 1994 an initial public offering of two million shares of stock was made on the NASDAQ exchange, with an additional million shares sold by the lenders who had become part owners in 1991. The response from investors was mixed, with prices lower than expected, and the value of the stock declined over the following months.

Company Perspectives:

Maximizing our opportunities within each of our four distribution channels, we are positioned to increase our profitability by opening new stores, increasing catalog sales, expanding corporate sales, and growing Internet sales. As styles and shopping preferences change in the years to come, we are well prepared to meet the demands of a dynamic marketplace and a highly diversified customer base. We are eagerly anticipating the possibilities of the coming century as we integrate all channels of distribution enhancing the consistency of our message and the compatibility of selling channels for our customers. By supporting all channels of distribution and using each channel to educate our customers about the others, we will secure our position as a dominant mens clothing retailer for the 21st century.

The company kept refining its approach. Plans were made to open a small number of catalog stores in towns where full showrooms were not warranted, but which had shown a good response from customers ordering by mail. These 1,100-square-foot outlets displayed the companys wares but did not stock merchandise for sale. Customers could try on the styles and have their purchases shipped to them via overnight delivery. Catalog stores were opened in locations such as Portland, Maine; Bedford, New Hampshire; and Montgomery, Alabama. Bank was also considering introducing specialty catalogs that featured only certain types of clothing, such as ties or sportswear. The company was accelerating its development of the latter category for its stores to meet the demand brought on by casual Fridays in the business world. Availability of big and tall sizes was also being expanded.

In September 1994 Bank opened its first store in New York City, on the corner of 46th Street and Madison Avenue, just blocks from the flagship stores of many of its major competitors. The 9,000-square-foot showroom was expected to do as much as $8 million in business the first year. Radio advertisements for the new location featured the tag line, Theres no status in overpaying. The companys expansion plans had begun slowing down, however, and Bank announced that it would be opening fewer stores than previously expected so it could concentrate more on its catalog, which accounted for about 15 percent of sales. The catalog, which had been a useful source of information on where to open new stores, was also serving as a trend-spotter. Items such as vests, which showed sudden surges of catalog orders, were highlighted in stores with good results.

In early 1995 Chick Schwartz stepped down as president, and Finley added that job to his other duties. Several months later, in May, the company announced that it was dropping womens clothes from its lineup by years end. Mens casual wear was expected to fill the space in stores, in a new department to be named Joes Casuals. Banks casual clothing was being purchased from outside suppliers, as was its womens line, rather than manufactured in its Baltimore and Hampstead, Maryland, plants.

In late 1995 Bank officials announced the closing of the Hampstead sewing factory and the loss of 100 jobs, as well as several store closings. The period since the stock offering had been a tough one, with national clothing sales declining and casual workplace trends increasing. The company reported losses for fiscal 1995 of $13.2 million, two-thirds of which were restructuring costs.

Sportswear Sales Spur Growth in the Late 1990s

1996 saw a turnaround in sales, however, with the expanded sportswear offerings doing particularly well, and the company managed a slim profit of $300,000. Bank had found a replacement for Chick Schwartz in Frank Tworecke, formerly of Merry-Go-Round stores, who was named president in September. The company also reached an agreement with golf pro David Leadbetter to feature his casual wear line in Bank stores.

In 1997 the company resumed its expansion, opening ten stores within a 12-month period. New locations were often added in existing markets so the company could get better bang for its advertising dollar. In February 1998 Bank announced it was selling its sole remaining factory, becoming the last major U.S. mens formal wear maker to leave this end of the business. M.S. Pietrafesa LP, the buyer, announced it would continue to operate the plant to produce clothing for Bank as well as other customers. Numbers for fiscal 1997 delivered more good news, with $2.5 million in profits reported on $172 million in sales.

In 1998 the company introduced a Web site where customers could order clothing, and additional stores were also opened. Over 100 were in business by years end, located in 28 states and Washington, D.C. Ten were franchise outlets, while the rest were company-owned. Bank also established a Corporate Sales division, which sold monogrammed clothing and other products directly to businesses for use as gifts or as employee uniforms. In May 1999 Timothy Finley stepped down after nearly nine years as CEO. He was widely credited with saving Bank from the scrap heap.

Having weathered the crisis years that followed its leveraged buyout, as well as the change to more casual styles of business wear, Jos. A. Bank appeared to be back on solid ground. Under Timothy Finley the company had examined its operations from the ground up and had made significant improvements in many areas. As it neared the end of its first century in business, the company was in the best health it had been in over a decade, and looked ripe for continued growth.

Principal Subsidiaries

Joseph A. Bank Manufacturing Co., Inc.; National Tailoring Services, Inc.

Principal Competitors

Brooks Brothers; Dillards, Inc.; Federated Department Stores, Inc.; Hartmarx Corporation; Lands End, Inc.; The May Department Stores Company; The Mens Wearhouse, Inc.; Nordstrom, Inc.; Phillips-Van Heusen Corp.; Polo Ralph Lauren Corp.; S&K Famous Brands, Inc.

Key Dates:

Jos. A. Banks grandfather Charles Bank formally establishes his clothing business.
Joseph A. Bank forms L. Hartz and Bank Co. with his mother-in-law.
Joseph and Howard Bank buy out Hartzs interest, company renamed Joseph A. Bank.
Company enters retailing at its Baltimore factory then at a Washington, D.C., store.
Bank begins catalog sales.
Womens clothing line introduced.
Bank family sells company to Quaker Oat Co.
Leveraged buyout by McKinley Investments and others.
Bank, nearly bankrupt, hires Timothy Finley as crisis manager/CEO.
Company goes public.
Womens clothing dropped.

Further Reading

Ariano, Alexis, Jos. A. Bank Joins Ranks of Retailers Capitalizing on Online Shopping Growth, Daily Record (Baltimore), February 1, 1999, p. 7A.

Bowie, Liz, A Seamless Commitment, Baltimore Sun, March 30, 1997, p. 1F.

DInnocenzio, Anne, Finleys Bailout Plan: Re-Define Banks Image, Daily News Record, March 28, 1991, p. 2.

Hall, Jessica, Banks Fashions a Turnaround, Daily Record, March 22, 1994, p. 1.

, Jos. A. Bank Public Offering Falls Far Short of Projections, Daily Record, May 4, 1994.

Hancock, Jay, Jos. A. Bank Adopts a More Casual Approach, Baltimore Sun, December 1, 1994, p. 9C.

, Jos. A. Bank Alters Line, Management, Baltimore Sun, March 16, 1995, p. 13D.

, Jos. A. Bank: On the Mend, Baltimore Sun, May 22, 1994, p. 1D.

Hinden, Stan, Jos. A. Bank Clothiers Seeks a Suitable New Look, Washington Post, March 28, 1994, p. F29.

Krieger, Dale, Hanging by a Thread, Warfields, February 1, 1991, p. 38.

Mayer, Caroline E., Bank Clothiers Is Fashioning Expansion Plans, Washington Post, April 11, 1988, p. F05.

Mirabella, Lorraine, Clothier Loses the Man Who Mended It, Baltimore Sun, May 22, 1999, p. 12C.

, Jos. A. Bank Bets on Corporate Casual, Baltimore Sun, September 21, 1999, p. 1C.

, Jos. A. Bank Sells a Plant, Ends an Era, Baltimore Sun, February 19, 1998, p. 1C.

Murray, Shanon D., Clothier Sells 2 Operations in City, Baltimore Sun, April 22, 1998, p. 1D.

Owens, Jennifer, You Can Take It to the Bank; Jos. A. Bank CEO Tim Finley Has Strong Growth Plans. Daily News Record, September 8, 1997, p. 7.

Palmieri, Jean E., Putting Jos. A. Bank Back in the Black, Daily News Record, December 27, 1993, p. 4.

, The First Bank of New York: Jos. A. Bank Opens Its First New York Retail Store Today, Daily News Record, September 1, 1994, p. 8.

Pressler, Margaret Webb, Jos. Bank Suits up to Win in Retailing Fray, Washington Post, April 26, 1996, p. F05.

Singletary, Michelle, Jos. Bank Pins Turnaround Hopes on Ad Campaign, Baltimore Evening Sun, March 18, 1991, p. B1.

Sundius, Ann, Interview With the Chairman of Jos. A. Bank Clothiers from the Wall Street Forum Institutional Investor Conference [transcript], MSNBC Private Financial Network, June 24, 1997.

Wilson, Marianne, Jos. A. Bank Sharpens Image, Chain Store Age Executive with Shopping Center Age, October 1, 1992, p. 86.

Frank Uhle