This year has been a disaster for The Men’s Wearhouse (MW) trading down near 70% for the year and falling again today under heavy selling pressure. This company has done nothing good since George Zimmer sold his shares. I spoke with George at a conference recently. He has a hanging bag full of money and an online tailoring business which was doing well. George looked tan and happy.
Conversely, Men’s Wearhouse has been one of the worst performing stocks in 2015. It doesn’t look good for the company from a revenue perspective and seemingly has little chance of returning to “growth stock” status. It seems Men’s Wearhouse is destined for mothballs or liquidation if shareholder exodus continues. Apparel portfolio managers are a finicky bunch and they (traditionally) can accumulate large positions and move stocks higher, expanding the valuations as they take a position which moves the needle for their own portfolio. That said, this sword has two edges, evidenced by the exit of a large fund back in November. This reeks of someone at the company not being forthright about how the quarter was tracking. PM’s do not like to be lied to, and do not like to be told their spreadsheets are wrong, when in effect they were exactly on target.
The problems really started on November 5th when management threw in the towel on the 3 for 1 promotion because they were getting killed on the revenue line and they knew it. I’m not sure who owned this strategy internally, but they will not be with the company long as this peeled billions of dollars in value from the company, which was having a decent year up around 40%. In a dramatic turn, shares have now reversed and accelerated to the downside and are in danger of closing the year out on a disastrous note.
I’m not sure what Doug (CEO) and Mary Beth (CMO) are thinking but they have summarily driven shareholder valuation into the toilet. I am all for executives taking risk, but they may have shot themselves in the foot so badly here that they never walk again—much less run at a pace needed in the competitive apparel sector.
The Men's Wearhouse, Inc. operates as a specialty apparel retailer in the United States, Puerto Rico, and Canada. The company operates in two segments: retail and corporate apparel. The retail segment offers suits, suit separates, sport coats, slacks, formalwear, business casual, sportswear, outerwear, dress shirts, dress pants, overcoats, ties, shoes, and accessories for men in classic, modern, and slim fits in various sizes; and a selection of tuxedo rental products. It also offers ladies' career apparel, sportswear, shoes, and accessories; children's apparel; alteration services; and retail dry cleaning, laundry, and heir looming services. As of January 31, 2015, this segment operated 1,758 stores under the Men's Wearhouse/Men's Wearhouse and Tux, Jos. A. Bank, Moores, and K&G brands; menswearhouse.com, www.josbank.com, and josephabboud.com Internet sites; and 34 retail dry cleaning, laundry, and heirlooming facilities.
The corporate apparel segment provides corporate clothing uniforms and work wear to workforces under the Twin Hill, Dimensions, Alexandra, and Yaffy brands through various channels, including managed corporate accounts and catalogs, as well as through dimensions.co.uk and alexandra.co.uk Internet sites. This segment serves companies and organizations in the retail grocery, retail, banking, distribution, travel and leisure, postal, security, healthcare, and public sectors. The Men's Wearhouse, Inc. was founded in 1973 and is based in Houston, Texas.
Best of luck to Men’s Warehouse, I think the phone call they may want to make is to George Zimmer and let him come in as a consultant and sort out the mess the current team created. I just want to hear George say, “You’re gonna like the way you look” after he fixes this mess.