Men’s Wearhouse vs. Banks: Merger Doomed From the Start
He might not be the spokesman for the brand he created, but Men’s Wearhouse founder George Zimmer still had plenty to say about the proposed merger between MW and competitor Jos. A Banks. “It was ill-fated,” Zimmer told Bloomberg TV, “I recommended they not make the acquisition.”
Apparently, when MW was done letting Zimmer pitch for them, they were done listening to him altogether. A little less than two years ago, MW was able to acquire JAB for $1.5 billion. Now that move has been criticized ever since same-store sales at the Jos. A. Banks division have been plummeting – down 35 percent, at last check. That news caused share prices to fall off a cliff.
Zimmer, at least, can say he had nothing to do with the deal. After founding MW in 1973, he remained at the head of the table before being shown the door in 2013. In all that time, Jos. A Banks was seen as Men’s Wearhouse’s chief competitor in the affordable men’s business attire market. In all that time he remained against the merger. While neither Zimmer nor MW will say if his refusal to consider the merger played a factor in his dismissal, the plan to acquire JAB began to unfold shortly after he was sacked.
Zimmer told Bloomberg he didn’t like the merger because JAB had put itself in a very bad consumer PR position. “Joe Banks had really damaged their brand over a number of years by running incessant promotions … nobody wanted to pay regular price.”
Zimmer definitely has a point. “Joe Banks” became known in recent years as the place to go when you wanted to buy one suit and get two free. Who would be willing to pay retail when they could simply wait a few months and get three-for-one? Nobody, apparently.
But, whether that knowledge played a part in Zimmer’s firing is uncertain. What is certain, Zimmer butted heads with MW CEO Doug Ewert, a guy Zimmer himself handpicked. Zimmer liked things how they were. Ewert and others on the board wanted to chase after a younger generation. The board could not reconcile their intentions with keeping Zimmer on as the face of the brand. They cut out his promotions, then they sent him packing.
Lot of good it did them. Now there is no “face” of Men’s Wearhouse, and a nation of guys still walking around saying, “You’re gonna like the way you look … I guarantee it.”